4

1)
Correct
All of these are sources of state revenue. While park fees are voluntary, it is almost impossible to avoid sales taxes, and it is illegal to avoid income taxes. Also, park state revenue. 1) park entry fees sales tax individual income tax What do ALL of these have in common?
A)
they are mainly voluntary charges
B)
they are sources of state revenue
C)
they are examples of graduated taxes
they are responsible for equal amounts of revenue
In a market economy, a high price is a signal for A)
producers to supply less and consumers to buy less.
D)
B)
producers to supply less and consumers to buy more.
C)
producers to supply more and consumers to buy less.
D)
producers to supply more and consumers to buy more.
Macroeconomic Concepts (SSEMA1) Economic Activi
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(SSEMA2) Federal Reserve (SSEMA3) Fiscal Policy
2)
Correct
The characteristic of capitalism that buyers and sellers will freely and willing exchange inmarket transaction is called voluntary exchange. This combines with "profit working. 2)
In 1776 with An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith challenged the prevailing belief in mercantilist policie buyers and sellers will freely and willingly exchange in market transaction is called
A)
profit motive.
B)
economic freedom.
C)
voluntary exchange.
D)
entrepreneurial spirit.
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Fundamental Economic Concepts (SSEF4) Economic Systems
3)
Correct Even though Australia is mostly a market economy, the government does get involved. Because of this, the economy is technically a mixed economy. 3)
Even though Australia has great economic freedom, the government requires some products to meet safety and manufacturing standards. This can BEST be classified as a
A)
mixed economy.
4)
Why does the author feel standards are such a vital issue? A)
Standards affect over 80 percent of global commodity trade.
B)
U.S. standards limit U.S. companies from participating in the Chinese software industry.
C)
Standards should be raised, increasing U.S. trade barriers to combat inferior foreign goods.
D)
U.S. exports to China have exceeded imports from China, and higher standards have a negative affect.
An economy experiencing high levels of unemployment would most likely be producing at which point? A)
point A
B)
point B
C)
point C
Which of these factors should consumers research FIRST when they receive a credit card offer with a low introductory rate? A)
the APR after the introductory period expires
Productivity may BEST be defined as
A)
the quantity of production
B)
the amount of revenue earned
C)
the ratio of inputs to outputs
Assuming that the graph follows the normal laws of economics, the line represents
A)
demand.
supply. A period during which real GDP declines for two quarters in a row, or six consecutive months, is MOST LIKELY a A)
recession.
B)
recovery.
Although the members of the Board of Governors of the Federal Reserve System are appointed by the B) president, the Board does not receive funding from Congress. The seven members serve a 14 year term, and report to the Speaker of the House once a year. This MOST LIKELY results in
A)
more oversight from the executive branch.
B)
more oversight from the legislative branch.
C)
significant control by the Treasury Department.
D)
relative independence of the Federal Reserve System
According the graph, which of these actions would result in the state government receiving revenue? A)
a person buying a lottery ticket
One of the PRIMARY reasons that trade between nations takes place is because A)
no nation can be economically self-sufficient.
B)
resources are evenly distributed around the world.
C)
nations use their absolute advantage in production to monopolize international markets.
D)
nations produce a surplus at a lower cost and export it for goods that are too costly to produce.
Why are regressive taxes considered heaviest on low income taxpayers?
A)
Low income people should not have to pay taxes.
B)
The tax is on their income, and they pay a higher income tax.
C)
A sales tax is going to be a greater percent of a wealthy persons income than a low income persons income.
D)
The tax is levied on something other than income but ends up being a higher percentage of their income than it would be for a higher earner.
These facts provide evidence that Canada has a
A)
mixed economy.
B)
market economy
Correct
These are all arguments that would be used by someone opposed to the North American Free Trade Agreement. Even though the agreement eliminates barriers to to such activities. Of course, arguments about the merits of free trade are usually accompanied by political partisanship. 4) "Real wages for Mexican industrial workers declined 13.5% since 1994." "Over 500,000 U.S. employees have lost their jobs after their companies moved to Mexico." "Mexico has lost over 1 million farming jobs." "Illegal immigration to the U.S.. has approximately doubled since 1994." These are all arguments used by someone who would be OPPOSED to
A)
the North Atlantic Treaty Organization.
B)
the North American Free Trade Agreement.
5)
Correct
A GDP is the total of the value of all the goods and services produced in a country. Regardless of when it is sold, a vehicle produced in the summer of 2009 would be cou 5) A vehicle produced in the summer of 2009 and sold in December of 2012 would be counted in which years GDP?
A)
2009
6)
Correct
An example of credit is when a person borrows money from a finance company to buy a car. Once credit is extended to a person and is used for a purchase, the credit i
the financial obligation to repay the loan. 6) What is an example of credit?
A)
A person withdraws money from a bank account using an ATM card.
B)
A person borrows money from a finance company to buy a car.
7)
Correct
The federal personal income tax is a tax citizens pay according to their income, or themoney they earn during a specific time. The more income a citizen earns, the h good example of a progressive tax. 7) The federal personal income tax is an example of which kind of tax?
A)
sales tax
B)
excise tax
C)
regressive tax
D)
progressive tax
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Macroeconomic Concepts (SSEMA1) Economic Activity (SSEMA2) Federal Reserve (SSEMA3) Fiscal Policy
8)
Correct
The price of one nation's currency in terms of another nation's currency is the exchange rate. Exchange rates help determine not only how much money you'll have country, but the level and extent of trade between countries. 8) The price of one nation's currency in terms of another nation's currency is called
A)
fiscal policy.
B)
monetary policy.
C)
the exchange rate.
D)
the discount rate.
9)
Correct
The theory of supply-side economics holds that supply dictates demand: kind of if you make it, they will buy it. Reaganomics, as it was called in the early 1980s, practices, including massive tax cuts to allow business to produce more and, subsequently, people to buy more. 9) The theory that the government can best stimulate the economy by helping businesses produce more is known as
D)
supply-side economics.
10)
Correct
Workers on an assembly line are an example of specialization. Henry Ford's example is well-known, but all workers who learn only a few tasks instead of completing of specialization. 10) Workers on an assembly line are an example of
D)
specialization.
11)
Incorrect
Like all countries, Brazil has a mixed economy. While there are elements of market- private ownership of resources- and command- state-operated health care- eco that economy is a mixture of the two. 11)
Brazil trades with the United States more than it does with any other country. Industrially, the private sector has made Brazil one of the most a massive investment taking place since 1996. Still, over 1 million people live in state-owned housing and millions more are covered by governme These facts show that Brazil has a
A)
mixed economy.
B)
market economy.
C)
command economy.
D)
traditional economy.
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12)
Correct According to the Law of Demand, when there is a decrease in price there will be an increase in the quantity demanded of that product. 12) A decrease in the price of a particular product will result in
A)
a decrease in the demand for that product.
B)
a shift in the production possibilities frontier.
C)
an increase in the quantity demanded of that product.
D)
an increase in the quantity supplied of that product.
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Microeconomic Concepts (SSEMI2) Law Of Demand (SSEMI3) Economic Behavior
13)
Incorrect The willingness of producers to supply a product determines supply. The definition of supply in economics is the quantity which producers are willing to produce. 13) While demand is based on consumer purchases, supply is MOST LIKELY based on
C)
the willingness of producers to supply a product.
D)
the willingness to consumers to purchase a product.
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14)
Correct
A decreased average level of safety for passengers would be least likely to be one of the effects of this act. Notice that the first point in the act specifically states th
priority" in the industry. Deregulation is an important aspect of a market economy. 14)
"[W]ith respect to interstate and overseas air transportation to consider the following as being in accordance with the public convenience and the highest priority in air commerce; (2) placing maximum reliance on competition in providing air transportation services; (3) the encouragem through secondary or satellite airports; (4) the avoidance of unreasonable industry concentration which would tend to allow one or more air ca reduce services, or exclude competition; and (5) the encouragement of entry into air transportation markets by new air carriers, the encourage existing air carriers, and the continued strengthening of small air carriers." - Public Law 95-504, "Airline Deregulation Act" The LEAST LIKELY result of the passage of the Airline Deregulation Act of 1978 was
A)
ticket prices determined by market forces.
B)
greater competition within the airline industry.
C)
a decreased average level of safety for passengers.
D)
the creation of more and smaller airports in the U.S.
15)
Correct Individuals provide labor for factor markets and buy goods in product markets. Businesses do get productive resources, but not in product markets. 15) How do individuals contribute to the circular flow of economic activity?
A)
Businesses buy goods and services from individuals.
B)
Businesses purchase productive resources in product markets.
C)
Individuals provide labor for factor markets and buy goods in product markets.
D)
Individuals buy productive resources from factor markets and provide labor for product markets.
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Microeconomic Concepts (SSEMI1) Flow Of Goods
16)
Correct
Corporations are able to sell stock thus raising capital for the company. Stockholders have limited liability. The establishment of price ceilings is not an advantage o the demand was greater than the supply (ashortage). 16) A corporation is LEAST LIKELY to have which advantage?
A)
ability to sell stock
B)
ability to raise capital
C)
establishment of price ceilings
D)
limited liability of stockholders
17)
Correct Shanna would need proof of property insurance for a mortgage. This would protect not only her house but the goods she possesses inside of the house. 17) Shanna's mortgage company requires insurance coverage. Which type of insurance would she need?
A)
automobile
B)
disability
C)
life
D)
property
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Personal Finance Economics (SSEPF5) Risk-management
18)
Correct
Fiscal policy is how the government manages money to achieve specific goals, likeeconomic growth with stable prices. Public spending and taxation are the two ma 18) The process by which the government manages spending and taxes to influence the direction of the economy is
A)
tax policy.
B)
trade policy.
C)
fiscal policy.
D)
monetary policy.
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19)
Correct
In a command economy, individuals have less economic freedom since the government makes the major economic decisions. Typically, command economies are l resulting in a lower per capita GDP. 19) Which of these is a correct description of one of the ways in which a command economy differs from a market economy?
A)
Market economies discourage free enterprise.
B)
In a market economy, the government sets prices.
C)
Command economies tend to have a higher per capita GDP.
D)
In a command economy, individuals have less economic freedom.
20)
Correct
The EU's refusal to conduct trade with Burma/Myanmar is an example of tradebarriers. The EU is concerned about democracy and human rights abuses there, and when the government imprisoned or killed many citizensprotesting abuses of governmental power. 20)
The EU and ASEAN have a trade agreement in effect since 1980, however the EU refuses to trade with Burma/Myanmar as long as human right example of
A)
tariffs.
B)
subsidies.
C)
trade barriers.
D)
most favored nation.
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International Economics (SSEIN2) Trade Barriers
21)
Correct
The government raises taxes to fund programs that benefit the public. Garbage collection, highway construction, public education, and national defense are all help Political campaigning is primarily helpful to individuals running for office, and is therefore not funded by taxes. Private education and business expansion do not necessa 21) Which of these projects would MOST LIKELY be funded by the government using tax money?
A)
private education
B)
business expansion
C)
garbage collection
D)
political campaigning
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22)
Correct
Apac would benefit from stimulation of capital resources. Modern machinery could greatly increase their production, yielding more produce to sell. Additionally, be farmers to reach markets farther away. 22)
Over 80% of the people living in the Apac District in Uganda are farmers. However, profits are minimal due to the high costs of farming with po Apac would benefit from a stimulation of which type of resource?
A)
capital
B)
human
C)
marketing
D)
natural
23)
Correct
The BEST example of a regressive tax in the United States is the federal excise tax on gasoline. Most excise taxes affect the mid to lower income groups proportiona Other examples of regressive taxes would be a tax on cigarettes or alcohol- so-called "sin taxes"- and state sales taxes. 23) The BEST example of a regressive tax in the United States is
D)
the federal excise tax on gasoline.
24)
Correct
Sole proprietorship is an unincorporated business owned by a single person. An example would be your cousin's lawn mowing business he runs in the summer time 24) An unincorporated business owned by a single person, which may or may not have employees, is an example of a(n)
D)
sole proprietorship.
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Microeconomic Concepts (SSEMI4) Organization And Role Of Business
26)
Correct
The market clearing price is most closely associated with the equilibrium price. This means that there is neither a shortage nor a surplus of goods at a specific price. 26) The "market clearing price" is most closely associated with
A)
the price index.
B)
the price level.
C)
the price ceiling.
D)
the equilibrium price.
27)
Correct
Trade between nations can be mutually beneficial if one country has a comparative advantage. Even if one country has an absolute advantage, another country ma lower opportunity cost (comparative advantage). 27) Trade between nations can be mutually beneficial if one country has
A)
a monopoly.
B)
an absolute advantage.
C)
a comparative advantage.
28)
28)
Country X and Country Y are the same size in terms of population, area, and capital stock. If both countries devote all of their efforts to produci million widgets, while Country Y can produce 5 million. Based on the information given, Country X has
A)
a monopoly on the production of widgets.
B)
an absolute advantage in producing widgets.
29)
Incorrect Although several choices accumulate money tax-deferred, only Whole Life Insurancealso has no taxes at pay out and is therefore the BEST option. 29)
Reason for buying Pays out When Forms of Payment Accumulates Money Tax Deferred? Benefits taxable inco
Malia has decided to set aside money. She prefers to pay the least amount in taxes. According to the chart, which option BEST suits her needs?
A)
Deferred Annuities
B)
Term Life Insurance
C)
Immediate Annuities
D)
Whole Life Insurance
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Personal Finance Economics (SSEPF1) Spending And Saving (SSEPF5) Risk-management
30)
Correct
When inflation occurs, the buying power of the dollar would decrease. Inflation results in less "bang for your buck" because it erodes the purchasing power of a uni 30) Inflation is defined as a rise in the general level of prices. When inflation occurs, the buying power of the dollar would
A)
increase.
B)
decrease.
C)
remain stable.
D)
not be affected by inflation.
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Macroeconomic Concepts (SSEMA1) Economic Activity
31)
Incorrect
All strategies for allocating scarce resources must address for whom to produce, how to produce, and what to produce. These decisions are made by the producer the people who demand the product. 31) Because scarcity exists, any strategy for allocating scarce resources must address
A)
for whom to produce, what to produce, and which resources to produce.
B)
for whom to produce, how to produce, and what to produce.
C)
how to produce, and which resources to produce.
D)
when to produce which resources.
32)
Correct If China enforces the software procurement regulation, the MOST LIKELY result is U.S. software companies will have limited access to Chinese markets. "China's which could limit the ability of U.S. industry to sell software products and services to the Chinese government." 32) United States Combating Use of Standards as Trade Barriers by Benjamin H. Wu, accessed from usinfo.state.gov/xarchives
Tensions have arisen, however, when certain countries take restrictive action that could potentially exclude market access to U.S. businesses. In Committee to address a specific example where China has caused great concern with U.S. industry in its application of domestic source require procurement regulation which could limit the ability of U.S. industry to sell software products and services to the Chinese government. U.S. sof recognized as industry leaders for their leading-edge innovation, have invested billions of dollars in China to participate directly in China's grow especially necessary to combat and offset the perceived high rate of software piracy in China. If China enforces the software procurement regulation, the MOST LIKELY result is
A)
U.S. software companies will have limited access to Chinese markets.
B)
U.S. software companies will increased their access to Chinese government customers.
C)
U.S. software companies will increase their presence in the information technology market.
D)
U.S. software companies will invest billions of dollars in China to combat software piracy.
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33)
Correct Determining how much a person should invest CANNOT be determined from the chart. This is a personal decision that is based on individual finances. 33)
Reason for buying Pays out When Forms of Payment Accumulates Money Tax Deferred? Benefits taxable inco
Evan has many questions about life insurance and annuities. Which of the following questions CANNOT be answered using the information give
A)
How will the money be paid out?
B)
When will the money be paid out?
C)
How much should I invest in an annuity?
D)
Are there taxes on the life insurance benefits?
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34)
Correct When supply and demand curves are drawn on the same graph equilibrium price can be determined. This is the price agreed upon by producers and consumers. 34) In the graph, what information is determined by looking at the intersection of the supply and demand curves?
A)
the realative efficiency of production
B)
amount supplied at a specific price
C)
increase in demand
D)
equilibrium price
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Microeconomic Concepts (SSEMI2) Law Of Demand
35)
Correct
Tariffs, quotas, and subsidies are examples of trade barriers. Tariffs (taxes), quotas (limits or maximums on goods that can be traded), and subsidies (government payme affect the price of a good, which in turn affects its ability to be consumed. 35) Tariffs, quotas, and subsidies are examples of
A)
free trade.
B)
trade barriers.
C)
trade incentives.
D)
restrictive licenses.
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Macroeconomic Concepts (SSEMA3) Fiscal Policy
36)
Correct
Productivity is defined as a measure of the amount of output produced by a given amount of inputs in a specific period of time. Labor- and the cost associated with this. 36) A measure of the amount of output produced by a given amount of inputs in a specific period of time is the definition of
A)
allocation.
B)
productivity.
C)
opportunity costs.
D)
equilibrium price.
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Fundamental Economic Concepts (SSEF6) Productivity
37)
Correct
"China's pending software procurement regulation" is a specific example of a tradebarrier. The word "regulation" implies that China will attempt to limit or contro into the country. 37) On May 13, 2005, Benjamin Wu, the Department of Commerce's assistant secretary for technology policy delivered this testimony to the House Government Reform.
(excerpt)
"Mr. Chairman and members of the Committee, thank you for the opportunity to address your concerns on the use of domestic source restricti
Since standards and technical regulations affect over 80 percent of global commodity trade, domestic source restrictions by foreign governmen barriers, are a concern and have prompted the Department of Commerce to take recent action.
The Department of Commerce is committed to ensuring that standards are fair and responsive to market and technology needs, and that we pa trade barriers to American goods and services.
While U.S. standards concerns are not specific to just China, because American industry has demonstrated a clear interest to compete and part important that there is a standards development process that is open, transparent, participatory, and fair in China. In 2004, China was the Unit total merchandise trade between the two nations reaching $231 billion. The United States exported over $35 billion of merchandise to China, a previous year.
Tensions have arisen, however, when certain countries take restrictive action that could potentially exclude market access to U.S. businesses. In Committee to address a specific example where China has caused great concern with U.S. industry in its application of domestic source require procurement regulation which could limit the ability of U.S. industry to sell software products and services to the Chinese government. U.S. sof recognized as industry leaders for their leading-edge innovation, have invested billions of dollars in China to participate directly in China's grow especially necessary to combat and offset the perceived high rate of software piracy in China.
The U.S. Department of Commerce, along with the Department of State and Office of the U.S. Trade Representative, have been working hard to continue to have access to Chinese government customers. We will continue to work vigorously to achieve this goal." Which quote from the passage represents a specific example of a trade barrier?
A)
"China's pending software procurement regulation"
B)
"[T]he perceived high rate of software piracy in China"
C)
"China was the United States' third largest trading partner"
D)
"American industry has demonstrated a clear interest to compete...in the Chinese marketplace"
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38)
Correct The federal personal income tax is an example of a progressive tax. A progressive taxmeans the rate of tax rises as income rises (up to a certain point).
38)
The federal personal income tax is an example of what kind of tax?
A)
regressive tax
B)
progressive tax
C)
value-added tax
D)
proportional tax
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Personal Finance Economics (SSEPF3) Monetary And Fiscal Policy
39)
Correct
Increased unemployment is an indicator of an economic recession in the U.S. During the period of time referred to there was an economic downturn in the U.S. wh 39)
This graph shows that there was an increase in the unemployment rate in the U.S. in the years between 1990 and 1993. This increase most like
A)
an economic recession in the U.S.
B)
increased defense costs for the Cold War.
C)
the economic prosperity which existed during the Clinton administration.
D)
the decline in the size of the military following our withdrawal from Vietnam.
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40)
Correct
The correct answer is Federal Open Market Committee. The committee oversees openmarket operations, which are the buying and selling of government securitie U.S. monetary policy. 40)
The above chart represents the organization of the Federal Reserve System. Which of these correctly completes the chart?
A)
Federal Reserve Chairman
B)
Federal Open Market Committee
C)
President of the United States
D)
Senate and House of Representatives
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41)
Correct
One way to balance the trade deficit is to make domestic products more attractive to buyers, which can be the result of a lower value of the dollar relative to fore 41) A Weak Dollar by The Columbus Dispatch, September 7, 1999
If the price of buying a car starts rising in the United States, consumers may need to look no further than the dollar's recent slide against major
On the other hand, economically depressed Midwestern farmers may find it easier to sell surplus grain overseas if a weak dollar makes it cheap
The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen...It also has lost ground to the If the price of buying a foreign car in the U.S. rises as the passage suggests, which of the following results might balance the trade deficit?
A)
The price of foreign cars becomes more attractive to buyers.
B)
The price of domestic cars becomes more attractive to buyers.
C)
The high value of the yen encourages U.S. investment in Japan.
D)
Severe unemployment in the domestic car industry forces layoffs.
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International Economics (SSEIN3) Exchange Rates
42)
Correct
Many types of food are often exempt from the sales tax because food is viewed as a necessity. The rate of a sales tax varies in nearly every location, as sales taxes can be 2010, there was only one national sales tax (on the use of tanning beds), but there is a growing movement for a national sales tax (the FairTax movement). 42) What kinds of goods are often exempt from sales taxes at the state level?
A)
clothing
B)
food
C)
gasoline
D)
luxury
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43)
Correct An entrepreneur is a "business owner", a person who undertakes the responsibility of owning a business. 43) Which of the terms listed below is the BEST synonym for the word "entrepreneur"?
A)
"business owner"
B)
"home owner"
C)
"employee"
D)
"student"
44)
Correct
In the market clearing price, the supply by sellers meets the demand from buyers. This is also called the equilibrium price. 44) In the market clearing price,
A)
the demand by buyers is rapidly growing.
B)
the supply by sellers meets the demand from buyers.
C)
sellers have provided more goods than the demand from buyers.
D)
sellers have provided enough goods for buyers' demand, but at prices that are too high.
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45)
Correct
Resource markets are LEAST LIKELY to sell goods and services. Businesses use the inputs from the resource market to produce goods and services to sell on the prod 45) Resource markets are LEAST LIKELY to sell
A)
land.
B)
capital.
C)
goods and services.
D)
labor and entrepreneurs.
46)
Correct
Banks and other financial institutions use savings deposits to help borrowers by using deposits to make loans. Loans are made at a higher rate of interest than the origin and also makes money for the bank. 46) Banks and other financial institutions use savings deposits to help borrowers by
A)
using deposits to make loans.
B)
keeping deposits to earn interest.
C)
saving deposits in a secure vault.
D)
spending deposits to improve the bank's safety.
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Personal Finance Economics (SSEPF2) Role Of Banks (SSEPF3) Monetary And Fiscal Policy
47)
Incorrect
A measurement of the efficiency of international trade relies on determining the number of legal documents, amount of time, and financial cost that is involved w of goods being traded has little relevance in identifying trade barriers. Reforms in this area are a major priority for the nations of Africa as they seek to trade more efficie 47) Which factor would NOT be included in a measurement of the efficiency of trade between African nations?
A)
an analysis of the types of goods being traded
B)
financial cost associated with importing or exporting goods
C)
the number of legal documents required to import or export goods
D)
amount of time it takes to complete the import or export process
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48)
Correct One factor causing fluctuation in the exchange rate is interest rates. According to the document, other factors include GDP growth, inflation and trade deficits. 48) Foreign Exchange Market by Business & Economics Research Advisor, from the Library of Congress
The characteristics of the FX market that make it so unique are: the volume of trading, liquidity of the market, geographical dispersion, the 24 h the number and variety of market traders, and the factors that affect the exchange rate. This market has a number of marketplaces where curr avoid exploitation by arbitragers, difference in rates are usually kept at a minimum. Banks all over the world are involved in foreign exchange tr located in Tokyo, London and New York, allowing the market to remain open 24 hours a day; when Asian trading is ending, European trading is session. Traders do not have to wait for the market to open. Monetary flows and economic changes such as GDP growth, interest rates, inflatio surpluses, cause fluctuations in the exchange rate. Because news affecting foreign exchange is well publicized, insider information is almost non One factor causing fluctuation in the exchange rate is
A)
interest rates.
B)
lack of weekend trading hours.
C)
insider information by arbitragers.
D)
geographical dispersion of the FX market.
49)
Correct
Cuba is mostly a command economy: the government makes nearly all of the economic decisions for the people. Few private businesses are allowed to exist, and ap government employees. 49)
In which country would you MOST expect to find state-controlled industry, the greatest amount of restrictions on private business ownership, a for the government?
A)
Brazil
B)
Canada
C)
Cuba
D)
Mexico
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50)
Correct
Retailers, restaurants, and many businesses use positive incentives encouraging people to spend money, like coupons and deals. They want people to choose to sp 50) Coupons, "buy-one, get-one free" deals, sales, and discounts are
A)
positive incentives encouraging people to spend money.
B)
negative incentives encouraging people to spend money.
C)
positive incentives discouraging people from spending money.
D)
negative incentives discouraging people from spending money.
1)
Hide
Correct
The 1990s treaty between the U.S., Canada, and Mexico known as NAFTA involves primarily free trade between the three countries. NAFTA stands for the North Am into effect in 1994. 1) What was the primary subject of the 1990s treaty between the U.S., Canada, and Mexico?
A)
immigration
B)
reduction of nuclear weapons
C)
enforcement of democratic rights
D)
free trade between the three countries
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2)
Hide
Correct
There is a risk that the new business may fail, which makes entrepreneurship very difficult (and risky). 2) Entrepreneurs develop new goods and services to start a business. Why is entrepreneurship often difficult?
A)
There is a risk that the new business may fail.
B)
There are laws that restrict most new businesses.
C)
Motivation for profit may not be the best incentive.
D)
Healthy competition encourages higher quality products.
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Fundamental Economic Concepts (SSEF1) Resources And Scarcity
3)
Hide
Correct The federal personal income tax is an example of a progressive tax. A progressive taxmeans the rate of tax rises as income rises (up to a certain point). 3) The federal personal income tax is an example of what kind of tax?
A)
regressive tax
B)
progressive tax
C)
value-added tax
D)
proportional tax
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Macroeconomic Concepts (SSEMA1) Economic Activity (SSEMA3) Fiscal Policy
4)
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Correct
The article MOST LIKELY references ASEAN, or Association of Southeast Asian Nations. Members include the growing economies of Singapore, Indonesia, Philippine 4)
The September 27, 2003, Toronto Star had a headline reading, "Global Economy is Shifting Focus to East Asia". The article MOST LIKELY referen
A)
ASEAN.
B)
EU.
C)
NAFTA.
D)
OPEC.
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5)
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Correct
Ravi should investigate the APR after the introductory period expires because the initial APR often increases after a set period of time. Information about most fea disclosure box that must appear in all credit card solicitations. 5)
Ravi receives a credit card offer in the mail. The offer contains a low introductory rate. Although all of these are important factors, which of the accepting the offer?
A)
the cash advance and ATM features
B)
C)
the type of card, such as secured, regular or premium
D)
availability of special programs, such as frequent flier miles
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6)
Incorrect
Hide
A loose monetary policy is implemented to bring about decreased saving and increased spending. This is in order to give businesses a boost in production and, pote 6) What consumer behavior is the Federal Reserve Board trying to encourage when it implements a loose monetary policy?
A)
increased saving and spending
B)
decreased saving and spending
C)
increased saving and reduced spending
D)
decreased saving and increased spending
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7)
Hide
Correct High school students are more likely to pay for automobile insurance first than any other type of insurance. 7) The first type of insurance high school students are likely to pay for themselves is
A)
life insurance.
B)
property insurance.
C)
automobile insurance.
D)
disability insurance.
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8)
Hide
Correct
The reduction of trade barriers and the increased use of a common currency (theEuro) has helped to make trade between countries easier in Europe. No longer do their currency into that of their trading partners, though some countries- like Great Britain- still hold to their own monetary unit. 8) European businesses have found trade between countries easier in the past decade for two reasons: a reduction of tariffs and
A)
an elimination of immigrant labor.
B)
the funding of the War on Terrorism.
C)
an increase in anti-communist groups.
D)
the increased use of a common currency.
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9)
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Direct or indirect action by the federal government in the example given results in a higher federal deficit. Either option- reducing taxes or directly funding projects "jumpstart" the economy, it is a loss that could be made up quickly in the future. 9)
The federal government decides to offset a $50 billion decline in business spending. The government could spend $50 billion directly on project amount. Whether the action taken by the federal government is direct or indirect, the result is MOST LIKELY
A)
a lower federal deficit.
B)
a higher federal deficit.
C)
a short-term trigger of unemployment insurance.
D)
a longer period of decline in business spending.
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Macroeconomic Concepts (SSEMA1) Economic Activity (SSEMA2) Federal Reserve
(SSEMA3) Fiscal Policy
10)
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Correct
Tariffs raise prices on imports, while quotas set limits on imports, representing the best statement of differences between tariffs and quotas. Both are designed to barriers to free trade. 10) Which statement BEST reflects the difference between tariffs and quotas?
A)
Tariffs raise prices on exports, while quotas set limits on imports.
B)
Tariffs raise prices on imports, while quotas set limits on exports.
C)
Tariffs raise prices on exports, while quotas set limits on exports.
D)
Tariffs raise prices on imports, while quotas set limits on imports.
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11)
Hide
Correct Mr. Simpson would earn more money with compound interest because the amount on which interest is paid increases over time. The interest earned is added to 11)
Mr. Simpson deposits his money in a savings account at the Springfield Bank. Would he earn more money with simple interest or with compoun
A)
Simple interest earns more because simple interest always has a higher rate.
B)
He would earn the same amount, as these are different terms for the same thing.
C)
Simple interest earns more because the interest is determined annually on the original amount.
D)
Compound interest earns more because the amount on which interest is paid increases over time.
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12)
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Correct
he skills MOST LIKELY needed to be successful in the workplace depend on the type of job. Each occupation has its own set of skills, not necessarily dependent on th 12) The skills MOST LIKELY needed to be successful in the workplace
A)
depend on the type of job.
B)
are dependent on the worker.
C)
are measured by the U.S. Census.
D)
must be attained by higher-level education.
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Personal Finance Economics (SSEPF6) Earnings
13)
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Correct
This cartoon is suggesting that a national sales tax should be considered. When this cartoon was published in 1941, a national sales tax had been debated in Congre enacted. Notice also that there is an "income tax" on thetable. 13) Which of these conclusions can be drawn from the cartoon?
A)
An income tax should be created.
B)
The income tax is unconstitutional.
C)
A national sales tax should be considered.
D)
The sales tax should be replaced by the income tax.
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14)
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Correct
In a market economy, the market can adjust to changes over time as producers andconsumers both react to market conditions and are able to buy and sell in accor marketplace. 14) One advantage of a market economy is its ability to
A)
limit consumer choices.
B)
control the price of labor.
C)
sell goods at a high price.
D)
adjust to changes over time.
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Fundamental Economic Concepts (SSEF4) Economic Systems (SSEF5) Roles Of Government
15)
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Correct
"Toll roads" and other "user fees" are often used by governments because only those that use the services are burdened to pay for them. Even though they serve a s controversial than implementing new taxes because only a specific group has to pay them. 15) "Toll roads" and other "user fees" are often used by governments because
A)
people do not object to such fees.
B)
people get rebates for using those programs.
C)
only those that use the services are burdened to pay for them.
D)
they are associated with issues that people tend to consider in a negative way.
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Macroeconomic Concepts (SSEMA2) Federal Reserve (SSEMA3) Fiscal Policy
16)
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Correct
While peoples' wants are unlimited, resources are limited. While people and machines are inefficient and disasters can cause shortages, they do not account for th resources that define scarcity. 16) The BEST explanation of why there will always be scarcity is because
A)
people and their tools are inefficient.
B)
natural disasters create frequent shortages.
C)
governments create scarcity to keep people wanting more.
D)
while peoples wants are unlimited, resources are limited.
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17)
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Correct
A consumer good is one that is manufactured for general consumption. Therefore, thechain saw is the only consumer good on the list. If, however, modern science really, really cool capital good. 17) Which would be most likely to be a consumer good?
A)
lumber
B)
iron ore
C)
chain saw
D)
a bale of cotton
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18)
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Correct
A price ceiling (a maximum price which may be charged) is usually a price set below the current market price. This means that since the price is set a little too low th amount initially supplied. 18) A price set below the current market price is a characteristic of a
A)
price floor.
B)
regular price.
C)
price ceiling.
D)
equilibrium price.
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Microeconomic Concepts (SSEMI3) Economic Behavior
19)
Hide
Incorrect
The investment option with the highest rate of return and highest degree of risk is junkbonds. These bonds are usually for very speculative investments (high risk) b rate of return. 19) The investment option with the highest rate of return and highest degree of risk is
A)
junk bonds.
B)
common stock.
C)
U.S. treasury bills.
D)
investment-grade bonds.
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Personal Finance Economics (SSEPF2) Role Of Banks
20)
Hide
Correct
Trade between nations can be mutually beneficial if one country has a comparative advantage. Even if one country has an absolute advantage, another country ma lower opportunity cost (comparative advantage). 20) Trade between nations can be mutually beneficial if one country has
A)
a monopoly.
B)
C)
D)
a protective tariff on imports.
Stats
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International Economics (SSEIN1) Trade
21)
Hide
Correct
In the graph, the supply curve and the demand curve interesect at the equilibrium price.At the equilibrium price, quantity supplied equals quantity demanded. Th a surplus or a shortage of goods supplied. 21) Which statement accurately describes the contents of this graph?
A)
At the equilibrium price, quantity supplied equals quantity demanded.
B)
At the equilibrium price, quantity supplied exceeds quantity demanded.
C)
When the price goes above the equilibrium price, quantity demanded increases.
D)
When the price goes below the equilibrium price, quantity supplied increases.
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22)
Hide
Incorrect
In a market economy, a high price is a signal for producers to supply more andconsumers to buy less. If a price is set TOO high, though, then consumers will buy les
22)
In a market economy, a high price is a signal for
A)
B)
C)
D)
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23)
Hide
Correct
Fiscal policy is how the government manages money to achieve specific goals, likeeconomic growth with stable prices. Public spending and taxation are the two ma 23) The process by which the government manages spending and taxes to influence the direction of the economy is
A)
tax policy.
B)
trade policy.
C)
fiscal policy.
D)
monetary policy.
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24)
Hide
Correct
Canada, Mexico, and Japan are the largest trading partners of the United States. The respective order is MOST LIKELY due to NAFTA, or the North American Free Tra or elimination of barriers to trade between the United States, Canada, and Mexico.True, Japan is in Asia, but the the other two countries listed in the question ARE in NA 24) In 2002, Canada, Mexico, and Japan were the largest trading partners of the United States. The respective order is MOST LIKELY due to
A)
ASEAN.
B)
EU.
C)
NAFTA.
D)
OPEC.
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25)
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Correct Embargoes prohibit and limit trade or commerce with a specific country. OPEC's oilembargo on the US in 1973 drove up the price of gasoline. Therefore, a restriction of for goods usually imported from China to rise. 25) Which of these would BEST represent the effect of an embargo on trade with China?
A)
There would be a bear market.
B)
There would be a bull market.
C)
Prices for goods usually imported from China would rise.
D)
Prices for goods usually imported from China would fall.
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26)
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Correct Under the ration system, people might feel less inclined to work because additional work does not yield additional rations. 26)
Rationing is a system under which an agency such as the government decides everyone's "fair" share. Rationing has often been used during wa regardless of the amount of work completed, how would this affect peoples' incentive to work?
A)
The incentive to work will not change.
B)
People might feel more inclined to work.
C)
People might feel less inclined to work.
D)
There is no effect on the incentive to work.
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Fundamental Economic Concepts (SSEF5) Roles Of Government
27)
Hide
Correct
When production costs are reduced (as when the costs of materials decrease), suppliers are willing to produce more or sell at a lower price. This will cause the equi 27) What should happen to the equilibrium price of whoopee cushions when the price of the rubber necessary to make the cushions declines?
A)
The equilibrium price will rise.
B)
The equilibrium price will fall.
C)
The equilibrium price will stay the same.
D)
The price of substitute products will rise.
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28)
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Correct In a sole proprietorship, the owner has unlimited liability. This means that he is responsible for all the debts of his company. 28) Mr. Simpson is liable for all the debts of his company. Mr. Simpson has which type of business organization?
A)
monopoly
B)
corporation
C)
conglomerate
D)
sole proprietorship
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29)
Hide
Correct
Loose money or "easy" money means more money is available for borrowing and spending. Loose money may help economic growth and employment though it can cau 29) What is the term for the situation where more money is available for borrowing and investment?
A)
loose money
B)
open market
C)
tight money
D)
fiscal policy
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30)
Hide
Correct
Economics is the study of how individuals, institutions, and society make optimal choices under the conditions of scarcity. Scarcity exists when wants exceed resour 30) The study of how individuals, institutions, and society make optimal choices under the conditions of scarcity is
A)
allocation.
B)
deregulation.
C)
economics.
D)
specialization.
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31)
Hide
Incorrect
According to the author, the U.S. to China balance of trade in 2004 was roughly a $160 billion deficit. Remember the balance of trade is the difference between ex total trade was $231 and exports were $35, then imports must have totalled $196. The balance of trade is exports minus imports, or $35-$196 = -$161, the negative imp 31) United States Combating Use of Standards as Trade Barriers by Benjamin H. Wu, accessed from usinfo.state.gov/xarchives
While U.S. standards concerns are not specific to just China, because American industry has demonstrated a clear interest to compete and part important that there is a standards development process that is open, transparent, participatory, and fair in China. In 2004, China was the Unit total merchandise trade between the two nations reaching $231 billion [US imports were $196 billion]. The United States exported over $35 bi of over 25 percent over the previous year. According to the author, the U.S.-China balance of trade in 2004
A)
was a $35 billion surplus.
B)
was a $196 billion deficit
C)
D)
was a $161 billion deficit.
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32)
Hide
Correct
The excise tax is collected on the production of specific goods, like cigarettes or gasoline, produced or sold within a country. Excise taxes are usually passed from the pro the price of the good rises in the amount of the tax, and are sometimes called "sin taxes". 32) Which tax is collected on the production of specific goods, like cigarettes, within a country?
A)
excise
B)
income
C)
sales
D)
tariffs
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33)
Hide
Incorrect
Of the choices offered, the BEST example of the concept of conflict is the creation of the North American Free Trade Agreement in 1994. The purpose of NAFTA is to red business investment, and help North America be more competitive in the global marketplace. 33) Which situation is the BEST example of the concept of cooperation?
A)
the creation of the North American Free Trade Agreement in 1994
B)
the "Water War" that exists between Georgia, Alabama, and Florida
C)
the 1991 Persian Gulf conflict and the 2003 U.S. invasion of Iraq
D)
the embargo that the United States enforces against products from Cuba
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34)
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Correct
The pairing "capital and oil rig" is correct, since an oil rig is a machine that is used to make something else, a definition of "capital." A "rice field" is an example of la trained) labor, and telephone wire is another example of a "capital good." 34) Which example of productive resources is matched correctly?
A)
land and surgeon
B)
capital and oil rig
C)
labor and telephone wire
D)
entrepreneurship and rice field
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35)
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Correct
If the federal government wants to encourage businesses and consumers to spend moremoney, it would MOST LIKELY decrease the tax rate. This would give people turn, spark the economy... ideally. 35) If the federal government wants to encourage businesses and consumers to spend more money, it would MOST LIKELY
A)
increase the tax rate.
B)
decrease the tax rate.
C)
increase the reserve requirement.
D)
decrease government spending on goods and services.
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36)
Hide
Incorrect
The MOST LIKELY result of government programs to address the Great Depression in the United States was that deficit spending increased. Other than a short period of the federal government has been in debt. 36) The MOST LIKELY result of government programs to address the Great Depression in the United States was that
A)
deficit spending increased.
B)
the national debt decreased.
C)
many states enacted a balanced budget amendment.
D)
the federal government ran a budget surplus for the first time.
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37)
Hide
Correct
Which statement about investment in education is BEST SUPPORTED using the graphs? Using just the information on the graphs, more education leads to high dem 37) Which statement about investment in education is BEST SUPPORTED using the graphs?
A)
More education leads to high demand, low supply.
B)
More education leads to low demand, high supply.
C)
The average annual wage decreases as the amount of education increases.
D)
The average annual wage increases as the amount of education decreases.
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38)
Hide
Correct Individuals provide labor for factor markets and buy goods in product markets. Businesses do get productive resources, but not in product markets. 38) How do individuals contribute to the circular flow of economic activity?
A)
Businesses buy goods and services from individuals.
B)
Businesses purchase productive resources in product markets.
C)
Individuals provide labor for factor markets and buy goods in product markets.
D)
Individuals buy productive resources from factor markets and provide labor for product markets.
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39)
Hide
Correct In a command economy central government planning decides what will be producedas well as how it will be produced. 39) In a command economy, how is it determined what goods and services will be produced?
A)
Businesses decide what to produce on the basis of market conditions.
B)
Consumers decide through their behavior in the marketplace.
C)
Central government planning decides what will be produced.
D)
Supply and demand control production and price.
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40)
Hide
Correct
10 workers cause the marginal costs to exceed the marginal benefits. Although the marginal costs for 11 workers are also higher that the marginal revenue, the margina the costs. 40)
Number of Workers Total Costs Marginal Costs Total Revenue Marginal Revenue Total Profi
The owners of a local business are making a rational decision about how many workers to hire. How many workers would cause the marginal co
A)
B)
C)
10
D)
11
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Fundamental Economic Concepts (SSEF2) Rational Decision Making
41)
Hide
Correct
The Volkswagen Jetta has the advantages of fewer miles and a lower price than the Mini Cooper. The Jetta also has a better safety rating, but that was not in any o 41)
You want to buy a car, and you have researched the options in the table. What advantages do you see for buying the Volkswagen Jetta over the
A)
newer year and fewer miles
B)
fewer miles and lower price
C)
newer year and better safety
D)
higher price and better reviews
Personal Finance Economics (SSEPF1) Spending And Saving
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(SSEPF3) Monetary And Fiscal Policy
42)
Hide
Correct This interaction of supply and demand and the effect it has on price is a basic characteristic of a market economy. 42) In a market economy, prices are established by
A)
consumers and labor unions.
B)
decree of government agencies.
C)
the interaction of supply and demand.
D)
businesses which buy and sell the products.
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43)
Hide
Correct
As part of the circular flow of economic activity, in the product market, producers sellgoods and services to consumers. Productive resources are bought and sold in 43) In the product market,
A)
productive resources are bought and sold.
B)
producers sell goods and services to consumers.
C)
a nation's total output of goods and services increases.
D)
the amount of output produced by a given amount of inputs is measured.
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44)
Hide
Correct
The basic economic condition that exists when unlimited wants exceed limited productiveresources is called scarcity. All resources are limited, which makes scarcity 44) The basic economic condition that exists when unlimited wants exceed limited productive resources is called
A)
capital.
B)
scarcity.
C)
hyper inflation.
D)
opportunity cost.
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45)
Hide
Incorrect An oligopoly exists when a few firms dominate an entire industry. 45) Columbia Tires and Pacific Tires together control 75% of the tire market in the country. This is an example of what type of market structure?
A)
monopoly
B)
oligopoly
C)
perfect competition
D)
monopolistic competition
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46)
Hide
Correct The Environmental Protection Agency is responsible for administering the Clean Air Actas well as other federal laws that deal with protecting the environment. 46) Which federal government agency is responsible for administering the federal Clean Air Act?
A)
Department of Justice
B)
Department of Interior
C)
State Pesticide Control Agency
D)
Environmental Protection Agency
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47)
Hide
Correct The Social Security tax is considered to be a regressive tax. This means that that the tax rate decreases as one's taxable income increases. 47)
Under current law, one pays 6.2% of his/her income in Social Security taxes only on the first $97,500 of income, but none on income beyond th Given the information in this prompt, Social Security Tax is WHAT kind of tax?
A)
marginal
B)
progressive
C)
proportional
D)
regressive
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48)
Hide
Correct
The price drops and quantity demanded increases.The efficiency of the new oven allows Mr. Brown to reduce his prices. The lower prices would likely create increa product. 48) The new oven in Mr. Brown's bakery allows him to produce bread more efficiently and more cheaply. What is the MOST LIKELY effect?
A)
the price drops and the quantity demanded decreases
B)
the price rises and the quantity demanded decreases
C)
the price drops and the quantity demanded increases
D)
the price rises and the quantity demanded increases
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49)
Hide
Correct
In Britain, Germany, and Russia, the three basic economic questions are answered by those countries' producers and consumers. This is because they are all domin unlike the communist era of East Germany and the Soviet Union in the second half of the 20th century. 49)
At the start of the 21st century in Britain, Germany, and Russia, the basic economic questions of what, how, and for whom to produce were an
A)
industrial labor unions
B)
producers and consumers.
C)
central planning committees.
D)
international planning organizations.
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50)
Hide
Incorrect
Currently, the foreign exchange rate for all world currencies is a floating exchange rate, based on market forces of supply and demand. Now, the foreign exchange 50) Foreign Exchange Market by Business & Economics Research Advisor, from the Library of Congress
In 1971, U.S. dollars were no longer exchanged for gold; and in 1973, the floating exchange rate system that governs the FX market today was p valued by the market forces of supply and demand. Since the abandonment of the gold standard, the FX market has become an important part advent of floating exchange rates, the foreign exchange market has become unregulated. No institution sets rules for trading, and it is not unde organization. When necessary, governments and central banks often work together to restore stability to the FX market. Foreign exchange and Together, they affect the economic situation of people throughout the world. Currently, the foreign exchange rate for all world currencies is
A)
a fixed exchange rate, based on the U.S. dollar.
B)
a floating exchange rate, based on the U.S. dollar.
C)
a fixed exchange rate, based on market forces of supply and demand.
D)
a floating exchange rate, based on market forces of supply and demand.
1)
Correct
Trade between nations can be mutually beneficial if one country has a comparative advantage. Even if one country has an absolu may be able to produce a product with a lower opportunity cost (comparative advantage). 1) A) Trade between nations can be mutually beneficial if one country has
a monopoly.
B)
C)
D)
a protective tariff on imports.
Stats 2)
Question Feedback
Correct
A U.S. import quota on automobiles would result in higher automobile prices for U.S. customers as there would be restrictions automobiles coming into the U.S. 2) A) Which result would you expect from a U.S. import quota on automobiles?
lower automobile prices for U.S. customers
B)
higher automobile prices for U.S. customers
C)
fewer domestic jobs in the automobile industry
D)
more foreign automobiles flowing into the U.S.
Stats 3)
Question Feedback
Correct
If the Federal Reserve increases the discount rate, which causes interest rates to rise and people to save rather than s growth. When people save, they spend less and the money supply decreases. This also could cause employment problems, for if people spending money on goods and services then businesses cannot continue to employ as many people, nor can they expand their business 3) A) Which of these actions of the Federal Reserve can slow economic growth? The Federal Reserve regulates the amount of money that flows into and out of the nations economy.
B)
The Federal Reserve buys securities, which puts money back into the hands of people who can spend it in the marketplace.
C)
The Federal Reserve decreases the reserve requirement and banks have more money to loan to people who want to borrow it.
D)
The Federal Reserve increases the discount rate, which causes interest rates to rise and people to save rather than to spend.
Stats 4)
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Correct
A decreased average level of safety for passengers would be least likely to be one of the effects of this act. Notice that the fir states that maintaining airline safety is the "highest priority" in the industry. Deregulation is an important aspect of a market economy. 4)
"[W]ith respect to interstate and overseas air transportation to consider the following as being in accordance with t necessity: (1) the maintenance of safety as the highest priority in air commerce; (2) placing maximum reliance on
transportation services; (3) the encouragement of air service at major urban areas through secondary or satellite a
unreasonable industry concentration which would tend to allow one or more air carriers to unreasonably increase p
competition; and (5) the encouragement of entry into air transportation markets by new air carriers, the encourage markets by existing air carriers, and the continued strengthening of small air carriers."
- Public Law 95-504, "Airline Deregulation Act" The LEAST LIKELY result of the passage of the Airline Deregulation Act of 1978 was
A)
B)
C)
D)
Stats 5)
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Incorrect
Although several choices accumulate money tax-deferred, only Whole Life Insurancealso has no taxes at pay out and is therefore 5) Term Life Insurance Whole Life Insurance Deferred Annuities Immediate Annuities Reason for buying Provide income for dependents Provide income for dependents To accummulate money in a taxdeferred product To assure people don't "outlive income" Pays out When A person dies A person dies, or borrows the cash value of the policy A person makes withdrawls One period after purchase, stops at death Forms of Payment Single Sum Single Sum Single Sum Lifetime Income
Accumulates Mon Deferred? No Yes Yes
Yes, but only in th payout years
Malia has decided to set aside money. She prefers to pay the least amount in taxes. According to the chart, which option BEST suits her needs? A)
Deferred Annuities
B)
Term Life Insurance
C)
Immediate Annuities
D)
Whole Life Insurance
Stats 6)
Question Feedback
Correct
There are a few main characteristics of monopolistic competition, most importantly that there are many producers and many consu consumers believe that there are non-price differences among the competitors' products. Therefore, the relevant example is one in whi cellular service based on the availability of a specific type of phone. 6) A) Which scenario BEST represents monopolistic competition?
Two new restaurants open to compete with a national food chain.
B)
Two firms compete against each other to sell pearls in an urban market.
C)
A college student chooses cellular service based on the availability of a specific type of phone.
D)
A company wins a contract to be the sole provider of phone and cable television service for a city.
Stats 7)
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Correct
In a traditional system, economic decisions are based on custom while in a capitalist sytem, individuals make economic deci their needs and wants. 7) How does a traditional economy differ from a capitalist economy?
A)
In a traditional system, economic decisions are based on custom.
B)
In a capitalist system, the government answers the three basic questions.
C)
In a capitalist system, a central authority owns the factors of production.
D)
In a traditional system, a great variety of goods and services are available.
Stats 8)
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Correct
A loose monetary policy is implemented to bring about decreased saving and increased spending. This is in order to give busin potentially, employment. 8) What consumer behavior is the Federal Reserve Board trying to encourage when it implements a loose monetary policy?
A)
B)
C)
D)
Stats 9)
Question Feedback
Correct There is a risk that the new business may fail, which makes entrepreneurship very difficult (and risky). 9) Entrepreneurs develop new goods and services to start a business. Why is entrepreneurship often difficult?
A)
B)
There are laws that restrict most new businesses.
C)
Motivation for profit may not be the best incentive.
D)
Healthy competition encourages higher quality products.
Stats 10)
Question Feedback
Incorrect
Each of the companies above had huge scandals that resulted from poor, deceptive, inaccurate, and unchecked business practic have been accused and many have been convicted for lying about their business profits and fiscal health, resulting in either the entire loss of jobs for thousands of employees. 10) In the mid-2000s problems with corporations such as Enron, Worldcom, and Tyco demonstrated renewed and growing public concern about
A)
the volatile energy market.
B)
unchecked business practices.
C)
the effect of foreign competition in U.S. markets.
D)
too much government intervention in corporate America.
Stats 11)
Question Feedback
A)
B)
C)
D)
Stats 12)
Question Feedback
Incorrect
Three currencies represent 80% of the foreign exchange (FX) market trades becausethese hard currencies represent the large economies. These are the Japanese yen, the euro and the US dollar.
12)
Foreign Exchange Market by Business & Economics Research Advisor, from the Library of Congress
The world relies on the foreign exchange market. When buying foreign goods and services or investing in other cou
need to purchase the currency of the country where they are transacting business. Currencies are traded everyday
direct foreign investments, import and export needs of companies and individuals, purchases of foreign instrument
In addition, the FX market is often used as a means to obtain profits from short-term fluctuations of exchange rate
the Japanese yen dominate the foreign exchange market. These hard currencies, representing the world's largest in always in demand and make up 80% of the FX market trades. Why do three currencies represent 80% of the foreign exchange (FX) market trades?
A)
These hard currencies are tied to the gold-standard.
B)
They have the lowest interest rates and highest GDP.
C)
The three main trading centers are located in these countries.
D)
These hard currencies represent the largest industrialized economies.
Stats 13)
Question Feedback
Correct
Tariffs, quotas, and subsidies are examples of trade barriers. Tariffs (taxes), quotas (limits or maximums on goods that can be traded payments to producers to help make goods) affect the price of a good, which in turn affects its ability to be consumed. 13) A) Tariffs, quotas, and subsidies are examples of
free trade.
B)
trade barriers.
C)
trade incentives.
D)
Stats 14)
Question Feedback
Correct
Insurance companies consider all of the factors EXCEPT your ethnicity when determininginsurance costs. This is explicitly forbidde 14) A) You are purchasing your first vehicle. The insurance company informs you that all of these factors will be considered when determining the cost
your marital status.
B)
your ethnicity.
C)
your gender.
D)
your age.
Stats 15)
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Correct
In the graph, the supply curve and the demand curve interesect at the equilibrium price.At the equilibrium price, quantity supp demanded. This means that there will be neither a surplus or a shortage of goods supplied. 15)
Which statement accurately describes the contents of this graph?
A)
B)
C)
D)
Stats 16)
Question Feedback
Correct
When production costs are reduced (as when the costs of materials decrease), suppliers are willing to produce more or sell at a low cause the equilibrium priceto fall. 16) A) What should happen to the equilibrium price of whoopee cushions when the price of the rubber necessary to make the cushions declines?
B)
C)
D)
Stats 17)
Question Feedback
Correct The west coast of the United States was most affected by immigration from China, so San Francisco would be the correct answer 17) Chinese Exclusion Act; May 6, 1882
An Act to Execute Certain Treaty Stipulations Relating to Chinese
Whereas, in the opinion of the Government of the United States the coming of Chinese laborers to this country end localities within the territory thereof: Therefore,
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
of ninety days next after the passage of this act, and until the expiration of ten years next after the passage of this
laborers to the United States be, and the same is hereby, suspended; and during such suspension it shall not be la come, or having so come after the expiration of said ninety days, to remain within the United States.
This law states that the "Chinese laborers to this country endanger the good order of certain localities" in the United States. Which of these would LIKELY have wanted this law created and passed?
A)
Chicago
B)
Atlanta
C)
Philadephia
D)
San Francisco
Stats 18)
Question Feedback
Correct
Ravi should investigate the APR after the introductory period expires because the initial APR often increases after a set period features of acredit card offer are given in a disclosure box that must appear in all credit card solicitations. 18)
Ravi receives a credit card offer in the mail. The offer contains a low introductory rate. Although all of these are important factors, which of thes accepting the offer?
A)
the cash advance and ATM features
B)
C)
the type of card, such as secured, regular or premium
D)
availability of special programs, such as frequent flier miles
Stats 19)
Question Feedback
Correct
As the value of the dollar falls relative to other currencies, the MOST LIKELY result isincreased foreign demand for U.S. goods a for foreigngoods. 19)
If the price of buying a car starts rising in the United States, consumers may need to look no further than the dolla
foreign currencies.On the other hand, economically depressed Midwestern farmers may find it easier to sell surplus makes it cheaper for foreigners to buy U.S. goods.The dollar spent much of last week on the skids, flirting with its Japanese yen...It also has lost ground to the euro. The situation described in the passage would MOST LIKELY result in
A)
stable foreign demand for U.S. goods.
B)
stable U.S. demand for foreign goods.
C)
increased foreign demand for U.S. goods.
D)
increased U.S. demand for foreign goods.
Stats 20)
Question Feedback
Correct
In laissez-faire economics, the government's role is limited to a few actions to help maintain competition. The laissez-faire philo minimum government interference in the marketplace but also recognizes the importance of competition in a free enterprise system. 20) In laissez-faire economics, what is the role of the government in the economy?
A)
to help maintain competition
B)
to set prices of goods and services
C)
to determine what should be produced
D)
to regulate product quality and consumer safety
Stats
Question Feedback
21)
Correct
For businesses and entrepreneurs, net profit is generally considered to be the BEST measure of success. Businesses considered "s more income than they spend in providing their service or good. This is called "net profit." 21) For businesses and entrepreneurs, which of these is generally considered to be the BEST measure of success?
A)
net profit
B)
total revenue
C)
marginal cash
D)
marginal revenue
Stats 22)
Question Feedback
Correct
The factors of production are land, labor, capital, and entrepreneurship. Capital is defined as the equipment and factories neede 22) As one of the factors of production, capital is defined as
A)
the goods and services a business produces.
B)
the supply of labor needed to produce goods.
C)
the people that purchase goods and services.
D)
the equipment and factories needed to produce goods.
Stats 23)
Question Feedback
Correct In a sole proprietorship, the owner has unlimited liability. This means that he is responsible for all the debts of his company. 23) A) Mr. Simpson is liable for all the debts of his company. Mr. Simpson has which type of business organization?
monopoly
B)
corporation
C)
conglomerate
D)
sole proprietorship
Stats 24)
Question Feedback
Correct
A partnership shares the risks and profits, which is MOST LIKELY the business organization Jorge and Fred have formed. If they w would have to consult many attorneys and get licenses from the government. 24)
Jorge and Fred have a product they would like to sell. They decide to share the risks and profits by forming an unincorporated business. The busi MOST LIKELY formed is a(n)
A)
partnership.
B)
corporation.
C)
entrepreneurship.
D)
Stats 25)
Question Feedback
Correct
Sole proprietorship is an unincorporated business owned by a single person. An example would be your cousin's lawn mowing bu time. 25) A) An unincorporated business owned by a single person, which may or may not have employees, is an example of a(n)
partnership.
B)
corporation.
C)
entrepreneurship.
D)
Stats
Question Feedback
26)
Correct
Because banks are profit-making institutions, the interest charged by banks on loans must be more than the interest earned by called the spread. 26) A) Why is there a difference between interest charged and interest earned?
Banks are non-profit institutions.
B)
Banks are profit-making institutions.
C)
Banks must pay more than they receive.
D)
There is no difference between interest charged and interest earned.
Stats 27)
Question Feedback
Correct
Many people desired high tariffs because they believed that their jobs and goodswould be protected from foreign competit protect theirmarkets and workers hoped to protect their jobs. 27) A)
In the late nineteenth century, American manufacturers and workers demanded the maintenance of a high tariff on goods imported into the Unite
they hoped to lower the price of imports.
B)
it would result in the lowering of domestic prices.
C)
they believed that their jobs and goods would be protected from foreign competition.
D)
it would improve trade relations with foreign countries with which they hoped to do business.
Stats 28)
Question Feedback
Incorrect
Specialization reduces the cost of production. For example, a specialized worker has a higher output without increasing the amoun reducing labor costs. 28) In what way does specialization increase productivity?
A)
Specialization increases the demand for a product.
B)
Specialization reduces the cost of production.
C)
Specialized workers are generally more highly educated.
D)
Specialization reduces scarcity.
Stats 29)
Question Feedback
Fundamental Economic Concepts (SSEF3) Specialization
Correct When a demand curve moves to the right, as in this case, demand has increased. This might happen when there is a decrease in product. 29)
In the graph, what might explain the movement of the demand curve from D1 to D3?
A)
A surplus of the product
B)
A decrease in the general income of the region
C)
A reduction in the price of a substitute product
D)
A decrease in the price of a complementary product
Stats 30)
Question Feedback
Incorrect
A cost-of-living adjustment shifts wages to reflect changes in price levels. Therefore, the purpose of a cost-of-living adjustment is c 30) The union has demanded a cost-of-living adjustment clause in the new contract. What is the purpose of a cost-of-living adjustment?
A)
to ensure job security
B)
to ensure on-the-job training
C)
to counter the effects of inflation
D)
guaranteed stock options for employees
Stats
Question Feedback
31)
Correct According to the diagram, equililbrium price occurred mid-year in 1989. 31)
Washboard mussels are found along Wisconsin's portion of the Mississippi River. According to the diagram, equililbrium price occurred in whic
A)
1988
B)
1989
C)
1991
D)
1995
Stats 32)
Question Feedback
Incorrect
If the Federal Reserve increased the reserve requirement in banks, the amount ofmoney circulating in the economy would de on to more of their money rather than lend it to borrowers. 32) What would MOST LIKELY happen if the Federal Reserve decided to increase the reserve requirement in banks?
A)
The amount of federal taxes people owe would decrease.
B)
The amount of federal taxes people owe would increase.
C)
The amount of money circulating in the economy would decrease.
D)
The amount of money circulating in the economy would increase.
Stats 33)
Question Feedback
Correct
Fiscal policy is BEST DESCRIBED as actions by the federal government to use spending and revenue collection to influenc collection" is just a fancy term for "taxation." 33) A) Fiscal policy is BEST described as
benefits received by employees in addition to wages and salaries.
B)
actions by the Federal Reserve System to expand or contract the money supply.
C)
a system that relies on supply and demand to determine the value of one currency to another.
D)
actions by the federal government to use spending and revenue collection to influence the economy.
Stats 34)
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Correct A market economy emphasizes freedom of producers and consumers in the marketplace rather than equal distribution of wealth. 34) Decentralized decision making.
Adjusts to changes in the market place. Producers and consumers have control of the economy. All of these are characteristics of
A)
a traditional economy.
B)
a socialist economy.
C)
a command economy.
D)
a market economy.
Stats 35)
Question Feedback
Correct
The the Port of Savannah is one of the country's fastest growing. With the already large numbers of ships coming in to unload th annually, it stands to reason that many jobs would be associated with that process. 35)
The economy of Chatham County would MOST LIKELY be influenced by
A)
an international airport.
B)
the Port of Brunswick.
C)
the Port of Savannah.
D)
a subway system.
Stats 36)
Question Feedback
Correct
In order to maximize trade according to the principles of comparative advantage,country Y should produce food and import clo economic principle of comparative advantage explains how trade is beneficial for all parties involved as long as they produce goods with 36)
Country X can produce 1,000 units of food and 2,000 units of clothes. Country Y can produce 1,000 units of food and 1,000 units of clothes. In o principles of comparative advantage, A)
country X should produce food and import clothes from country Y.
B)
country Y should produce food and import clothes from country X.
C)
country X and Y should produce both food and clothes to meet their own needs.
D)
country Y should produce both food and clothes, and import additional clothes from country X.
Stats 37)
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Correct
The pairing "capital and oil rig" is correct, since an oil rig is a machine that is used to make something else, a definition of "capita of land, a "surgeon" is an example of (well-trained) labor, and telephone wire is another example of a "capital good." 37) A) Which example of productive resources is matched correctly?
land and surgeon
B)
capital and oil rig
C)
D)
Stats 38)
Question Feedback
Correct
Countries around the world specialize production, and trade with other countries based upon the comparative advantage in prod 38) A) Countries around the world specialize production, and trade with other countries based upon
the overall size of the economy.
B)
the rate of inflation in the economy.
C)
the comparative advantage in production.
D)
the amount of capital available to produce products with.
Stats 39)
Question Feedback
Correct
Splitting management and ownership into two distinct functions is an example of acorporation. Partnerships, on the other hand, 39) A) In a business organization, the splitting of management and ownership into two distinct functions is an example of a(n)
arbitage.
B)
corporation.
C)
entrepreneur.
D)
partnership.
Stats 40)
Question Feedback
Incorrect
Many types of food are often exempt from the sales tax because food is viewed as a necessity. The rate of a sales tax varies in nearly be levied by states, counties, and cities. As of 2010, there was only one national sales tax (on the use of tanning beds), but there is a g sales tax (the FairTax movement). 40) A) What kinds of goods are often exempt from sales taxes at the state level?
clothing
B)
food
C)
gasoline
D)
luxury
Stats 41)
Question Feedback
Correct Stocks have both high risk and high potential return because those two concepts go together in investing. 41)
Based on the graph, which of the following statements is TRUE? A)
Investors who want low risk should invest in bonds.
B)
A certificate of deposit is a riskier investment than a bond.
C)
Money in a stock-based mutual fund grows as fast as in a bond.
D)
Money in stocks have both high risk and high potential return.
Stats 42)
Question Feedback
Correct The girls should save $200 for next years supplies. This amount is 20% of $1,000. 42)
Jean and her friend run a lemonade stand over the summer. They make $1,000. Jean says that they should put aw supplies for next years lemonade stand. According to Jean, how much money should Jean and her friend save to spend on next years supplies?
A)
$200
B)
$300
C)
$400
D)
$500
Stats 43)
Question Feedback
Personal Finance Economics (SSEPF1) Spending And Saving (SSEPF3) Monetary And Fiscal Policy
Correct
The Senator's plan hopes that using tax breaks will allow businesses to upgrade outdated equipment and spur economic growt the capital investments. 43) Senator English Touts Tax Bills Aimed to Blunt Impact of Slowing Economy January 24, 2008
The Job Creation Economic Stimulus Act of 2008, components of which have received broad support from the busin
incentives for employers to make capital investments. Expensing allows companies to deduct from their taxes the c
other capital investment. This has the added benefit of making capital equipment more affordable, meaning that fo
means the difference between being able to afford new equipment or not. Expensing is a proven vehicle for injectin the most bang-for-the-buck, and often attracts bipartisan support.
Under the English plan, employers could recover up to 100 percent of their capital investment if they purchase and equipment, such as computers or high technology medical devices, among others, before January 1, 2009. How will the Senator's plan spur economic growth?
A)
The business community will support the plan.
B)
Using tax breaks will allow businesses to upgrade outdated equipment.
C)
Employers can use 100 percent of all their taxes to purchase new equipment.
D)
Businesses will be able to save the money they will receive back from taxes.
Stats 44)
Question Feedback
Correct
Fiscal policy is the process by which a government gathers and spends money. An increase in taxes would mean a change in fisca policy. Unemployment, prices of goods, and revenue collections are connected to fiscal policy, but are not actually policies set by the go 44) Which action would be a change in the governments fiscal policy?
A)
an increase in taxes
B)
a decrease in unemployment
C)
a decrease in collected revenues
D)
an increase in the price of goods
Stats 45)
Question Feedback
Correct
According to the help wanted ad for a surgeon, 15+ years of experience will provide the LARGEST signing bonus. It reads that "$1 of experience, up to $15,000." 45) Help Wanted Ads
Established company seeking full-time residential house cleaner. We will train. Must be honest and dependable. Ca
Suburban medical facility seeking surgeon. Board Certified required. $1,000 signing bonus for every year of experie to 123 Medical Drive, Suburbia, GA.
Temporary lifeguard needed to fill summer holiday shifts at outdoor swimming pool. Must have CPR and lifeguard c Bridgefront, 123 Bridgefront, Anytown, GA.
Aircraft manufacturer seeking engineers with advanced degree in physics and no less than 15 years experience. Ma resume to 123 Aircraft Blvd., Anytown, GA. According to the help wanted ad for a surgeon, how many years of experience will provide the LARGEST signing bonus?
A)
0-4 years
B)
5-9 years
C)
10-14 years
D)
15+ years
Stats 46)
Question Feedback
Correct
When you choose to do one thing instead of doing another, you've made an opportunity cost. You gave up a number of things to right now, an the #1 thing you decided NOT to do is referred to as the "opportunity cost".
46) A)
Which type of cost occurs when an individual pays for a piano lesson instead of going to a movie?
fixed cost
B)
marginal cost
C)
residual cost
D)
opportunity cost
Stats 47)
Question Feedback
Correct
Unemployment insurance, welfare, medicare, medicaid, and Social Security are key components of fiscal policy. Fiscal policy is rep spending programs and, together with monetary policy, is part of a country's Macroeconomic policy. 47) Unemployment insurance, Welfare, Medicare, Medicaid, and Social Security are key components of
A)
fiscal policy.
B)
monetary policy.
C)
supply-side policy.
D)
wage-price controls.
Stats 48)
Question Feedback
Correct
Through the The African Free Trade Zone, the leaders of COMESA, EAC, and SADC hope to create a single free trade zone consis an estimated $624 billion. It is hoped that the African Free Trade Zone agreement would ease access tomarkets within the AFTZ zone a the fact that several of the member countries in the AFTZ belong to multiple regional groups. 48)
A major step toward economic cooperation among African nations came in 2008 when the Common Market for Eastern and Southern Africa (CO
(EAC), and the Southern African Development Community (SADC) announced the creation of ________________________ to strengthen and s
A)
the African Free Trade Zone
B)
the African Economic Community
C)
the United Nations Economic Commission for Africa
D)
the Treaty for Establishment of the East African Community
Stats 49)
Question Feedback
Incorrect
The U.S. has a comparative advantage in producing Product B and Japan in Product A, which means overall trade incre produce these products on their own, overall production increases as a result of comparative advantage and specialization. 49)
Use the chart to answer the accompanying question. Why should the U.S. and Japan trade products A and B, even if they can both produce the products individually?
A)
The U.S. has an absolute advantage in producing Product B, which means Japan should trade for it.
B)
Japan has an absolute advantage in producing Product A, which means the U.S. should trade for it.
C)
Japan has a comparative advantage is the production of both products, which means the U.S. should trade for them.
D)
The U.S. has a comparative advantage in producing Product B and Japan in Product A, which means overall trade increases.
50)
50)
Columbia Tires and Pacific Tires together control 75% of the tire market in the country. This is an example of what type of market structure?
A)
monopoly
B)
oligopoly
1)
Incorrect The west coast of the United States was most affected by immigration from China, so San Francisco would be the correct answer 1) Chinese Exclusion Act; May 6, 1882
An Act to Execute Certain Treaty Stipulations Relating to Chinese
Whereas, in the opinion of the Government of the United States the coming of Chinese laborers to this country end localities within the territory thereof: Therefore,
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
of ninety days next after the passage of this act, and until the expiration of ten years next after the passage of this
laborers to the United States be, and the same is hereby, suspended; and during such suspension it shall not be la come, or having so come after the expiration of said ninety days, to remain within the United States.
This law states that the "Chinese laborers to this country endanger the good order of certain localities" in the United States. Which of these would LIKELY have wanted this law created and passed?
A)
Chicago
B)
Atlanta
C)
Philadephia
D)
San Francisco
Stats 2)
Question Feedback
Correct
When inflation occurs, the buying power of the dollar would decrease. Inflation results in less "bang for your buck" because it erod of currency. 2) Inflation is defined as a rise in the general level of prices. When inflation occurs, the buying power of the dollar would
A)
increase.
B)
decrease.
C)
remain stable.
D)
Stats 3)
Question Feedback
Incorrect
All of these are Federal Reserve System districts. There are 12 Federal Reserve Districts in the U.S., each represented by the ci of them are also U.S. Court of Appeals cities, but neither Cleveland nor Dallas are cites of U.S. Courts of Appeals. 3) Atlanta Boston Cleveland Dallas All of these represent
A)
state capitals.
B)
cities with major ports.
C)
U.S. Court of Appeals cities.
D)
Federal Reserve System districts.
Stats 4)
Question Feedback
Correct
An exchange rate is used to determine the price of one country's currency in terms of another country's currency. Exchan how much moneyyou'll have to spend when you travel to another country, but the level and extent of tradebetween countries.
4) A)
An exchange rate is used to
promote the argument supporting free trade.
B)
promote the use of subsidies on foreign goods.
C)
determine the price of one country's imports in terms of another country's imports.
D)
determine the price of one country's currency in terms of another country's currency.
Stats 5)
Question Feedback
Correct
In these examples, a fast food employee who works 40 hours a week making minimum wage would be impacted most negative regressive tax- such as asales tax- takes a larger percentage of a person's income as that income decreases. This is not necessarily the 5) A) A regressive tax would NEGATIVELY impact which of these people most?
a Major League baseball player
B)
a public school teacher with 25 years experience
C)
a chemical engineer for a major pharmaceutical manufacturer
D)
a fast food employee who works 40 hours a week making minimum wage
Stats 6)
Question Feedback
Incorrect
Of the groups listed, indiviudals living on fixed incomes would be most impacted byinflation. Their incomes do not change yet t increasing. They can buy less goods and services. 6) A) Of the following groups, who would be the most impacted by inflation?
members of strong labor unions
B)
people who do not have any debt
C)
employees who have received raises
D)
individuals living on fixed incomes
Stats 7)
Question Feedback
Correct
South Carolina's a "right to work laws prohibit agreements between labor unions and employers from making a person join a union become an employee. Therefore, "right to work" laws would affect union membership. Nearly all states in the South are "right to wor 7) A) South Carolina is a "right to work" state, which would have the BIGGEST impact on
minimum wage.
B)
union membership.
C)
international trade.
D)
agricultural production.
Stats 8)
Question Feedback
Correct According to the Law of Demand, when there is a decrease in price there will be an increase in the quantity demanded of that 8) A) A decrease in the price of a particular product will result in
B)
C)
D)
Stats 9)
Question Feedback
Correct
The MOST LIKELY incentive for entrepreneurs to start a new business is to make a profit. Although they may create a new patent the primaryincentives for entrepreneurs. 9) The MOST LIKELY incentive for entrepreneurs to start a new business is
A)
to make a profit.
B)
to discover a new patent.
C)
to risk financial failure.
D)
to create a new social benefit.
Stats 10)
Question Feedback
Correct The European Union has been successful at lowering or eliminating barriers that slow down trade between countries. This trade between countries because there are fewer and lower taxes on imported goods. 10) A) The European Union has positively affected the economies of Europe by
refusing to allow countries to trade with each other.
B)
allowing England to become the richest European country.
C)
lowering or eliminating barriers that slow down trade between countries.
D)
making taxes on imported goods higher and promoting economic independence.
Stats
Question Feedback
11)
Correct
Imposing some sort of cost on trade that raises the price of the traded products is MOST LIKELY an example of a trade barrier. Ta examples. 11) Imposing some sort of cost on trade that raises the price of the traded products is MOST LIKELY an example of
A)
a trade barrier.
B)
a trade surplus.
C)
a trade deficit.
D)
a trade incentive.
Stats 12)
Question Feedback
Correct
As the value of the U.S. dollar has increased relative to the peso, the buying power of the U.S. dollar has increased in Mexico. Ther Mexican goods benefit from this occurrence. 12) A) Over the course of a year, the Mexican peso has depreciated relative to the U.S. dollar. Who would MOST benefit from this occurrence?
U.S. consumers of U.S. goods
B)
U.S. consumers of Mexican goods
C)
Mexican consumers of U.S. goods
D)
Mexican consumers of Mexican goods
Stats 13)
Question Feedback
Correct
The potential for profit drives individuals to risk their savings in a business venture. Theprofit motive drives individuals to improve th 13) A) In a free enterprise system, what drives individuals to risk their savings in a business venture?
the idea of failure
B)
the desire to pay taxes
C)
the potential for profit
D)
the increase in stock prices
Stats 14)
Question Feedback
Correct In relation to the Indian Rupee, the Canadian dollar is worth significantly more. Foreign Exchange Rates 14) County / Currency Foreign Currency in U.S. Dollars U.S. Dollars in Foreign Currency UK / Pound Japan / Yen India / Rupee Canada / Dollar 2.0292 .0084 .0248 .9394 .4928 118.9599 40.3950 1.0645
In relation to the Indian Rupee, the Canadian dollar
A)
is worth slightly more.
B)
is worth slightly less.
C)
is worth significantly more.
D)
is worth significantly less.
Stats 15)
Question Feedback
Correct
The Law of Supply states that the quantity supplied of a product will increase as theprice increases and will decrease as the 15) A) The Law of Supply states that
the supply of a product is not affected by its price.
B)
when the supply of a product decreases, the price of the product falls.
C)
when the supply of a product increases, the price of the product rises.
D)
the quantity supplied of a product will increase when the price of that product increases.
Stats 16)
Question Feedback
Correct
In economics, capital includes the buildings and equipment needed to produce goods andservices. Therefore, buying new equipm 16) A) Which of these BEST represents capital investment for a company?
advertising
B)
renting space
C)
buying new equipment
D)
hiring new employees
Stats 17)
Question Feedback
Correct The Kia Rio is a 2005 and has only 23K miles. You will need to save $10,500 to buy this car. 17)
You have decided to buy a car and would like a newer model year. You also want very low miles. Based on the research in the table, how much w
A)
$10,500
B)
$12,000
C)
$14,999
D)
$15,999
Stats 18)
Question Feedback
Correct
The GDP, or Gross Domestic Product, is best defined as the market value of all goods andservices produced in a country. Each co GDP, and this economic statistic is often used to measure the general health of nations' economies. 18) A) Which of these is the BEST definition of GDP?
a description of the quality of life in a nation
B)
a collection of all government assets that could earn money
C)
market value of all goods and services produced in a country
D)
amount of financial income in business transactions all over the world
Stats 19)
Question Feedback
Correct
In a market economy, a high price is a signal for producers to supply more andconsumers to buy less. If a price is set TOO hi
buy less. 19) A) In a market economy, a high price is a signal for
B)
C)
D)
Stats 20)
Question Feedback
Incorrect
Certificates of Deposit would best meet Jan's need because many CDs are less than two years, and provide a higher rate of retur 20)
Jan is risk-averse, but wants to earn the best rate of return in less than two years. Which investment would MOST LIKELY meet Jan's need?
A)
Bonds
B)
Stocks
C)
Certificates of Deposit
D)
Stock-Based Mutual Funds
Stats 21)
Question Feedback
Correct
The increased output means the U.S. and Japan can trade excess units of Products A and B. Even though they can each p own, overall productionincreases as a result of comparative advantage and specialization. 21)
What is the MOST LIKELY result of specialization in producing Products A and B?
A)
Japan stops producing and using Product B.
B)
The U.S. stops producing and using Product A.
C)
The increased output means the U.S. and Japan can trade excess units of Products A and B.
D)
Specialization means the U.S. will trade 800,000 units of Product B for 60,000 units of Product A.
Stats 22)
Question Feedback
Correct
Local governments generally receive their highest amounts of revenue from property taxes. These can be levied on land or on items s 22) Local governments generally receive their highest amounts of revenue from
A)
federal government grants.
B)
drivers license fees.
C)
property taxes.
D)
excise taxes.
Stats 23)
Question Feedback
Correct
Wages would decline as the competition for jobs increases. Workers and their wages follow the same laws of supply and dem the market. 23) A)
If the supply of computer engineers increases at the same time that the demand for these workers decreases, what would be the MOST LIKELY e
Wages would stay the same as job opportunities increase.
B)
Wages would increase as the number of workers increases.
C)
Wages would decline as the competition for jobs increases.
D)
Wages would increase as competition for these workers increases.
Stats
Question Feedback
24)
Correct
The best definition of a budget is a plan for raising, maintaining, and spending money. Every year, each state and local governme will managemoney to be most useful to their citizens. 24) A) Which is the BEST definition of budget?
a system for designing, creating, and distributing money
B)
a plan for raising, maintaining, and spending money
C)
the money a government collects from citizens
D)
the bills that a government must pay
Stats 25)
Question Feedback
Incorrect
If interested in high earnings, one would want to pursue a career that has a relatively low supply and high demand for workers the price for labor in afactor market, which is influenced by the laws of supply and demand. 25) A) If someone is interested in pursuing a career with a relatively high earnings potential, which would be the best choice?
a career that has a relatively low supply of workers
B)
a career that has a relatively high demand for workers
C)
a career that has a relatively low supply and high demand for workers
D)
a career that is well established with plentiful workers who would be mentors
Stats 26)
Question Feedback
Correct
In a recession, many people are out of work. When people are laid off or lose their jobs, they are able to pay less in taxes. This me less money. As a result, the government usually has to significantly change its spending. 26) A) During a recession, what will the federal government MOST LIKELY do to stabilize the economy?
increase taxes significantly
B)
maintain its level of taxation
C)
maintain its level of spending
D)
significantly change its spending
Stats 27)
Question Feedback
Correct
Demand is defined as the consumers' ability and willingness to buy a product at a given price. In addition to the desire for a pr ability and be willing to buy the product. 27) A) Demand for a product is measured not only by consumer desire for a product, but also by
opportunity costs.
B)
competition for the consumer.
C)
demand for all similar products.
D)
ability and willingness to buy the product.
Stats 28)
Question Feedback
Incorrect
If the federal government uses a Keynesian model to fund US government programs, the result MIGHT be a higher national debt. Th following theGreat Depression through the early 1970s. It has made a resurgence in the economic crises facing the US since 2007. The increase at exponential rates. 28)
Early Keynesian theorists developed the balanced budget multiplier, which suggests that an equal increase in government spending and tax reven precisely the increase in the amount spent.
If the federal government uses a Keynesian model to fund US government programs, what MIGHT be the result? A)
Higher national debt
B)
Reduction of federal income tax
C)
Decreased government spending on programs
D)
A push for a balanced federal budget amendment
Stats
Question Feedback
29)
Correct
One way that the free enterprise system of the United States promotes individual initiativeis that authors can have their original wo the exclusiveright to publish, distribute, and adapt a particular work for a certain period of time. This allows the creator of the work to p creation. 29) A) Which of these is the BEST example of how the free enterprise system of the United States promotes individual initiative?
Men must register for selective service.
B)
A citizen may be called to serve on a jury.
C)
The legislative branch levies an income tax.
D)
Authors can have original works copyrighted.
Stats 30)
Question Feedback
Correct
When individuals purchase goods in the product markets, money flows back to businesses. Consumer spending is a vital part of t activity. 30)
Money that individuals receive from businesses return to businesses in A)
the factor markets.
B)
the product markets.
C)
the purchase of land.
D)
the payment for resources.
Stats 31)
Question Feedback
Correct
NAFTA stands for North American Free Trade Agreement and is responsible for the increase in trade between Mexico and the US. The t also included Canada. 31)
According to the chart, what is the reason for the increase in trade between the US and Mexico? A)
GATT
B)
NAFTA
C)
NATO
D)
WTO
Stats 32)
Question Feedback
Correct
Any investment in labor training or education is considered an investment in human capital which is an improvement in the human re
32)
An ivestment in improving the skill level of labor is considered an investment in
A)
human capital.
B)
entrepreneurship.
C)
improved technology.
D)
capital improvements.
Stats 33)
Question Feedback
Correct A trade-off in economics occurs when one opportunity is sacrificed in order to choose another. 33) A) Bart has decided to buy some water balloons rather than get an extra milk at lunch. Choosing among economic alternatives is referred to as
scarcity.
B)
a trade-off.
C)
labor allocation.
D)
interdependence.
Stats 34)
Question Feedback
Correct
In a capitalist economy, the consumer is king since consumers determine what products will be produced. In other words, th through their willingness or unwillingness to purchase a product results, eventually, in certaingoods being produced more often or some This concept is referred to as consumer sovereignty. 34) A) Why is the consumer considered "king" in a capitalist economy?
consumers own the productive resources
B)
consumers contribute to the factor market
C)
consumers vote for elected government officals
D)
consumers determine what products will be produced
Stats 35)
Question Feedback
Correct
If you note that the lines represent education and the vertical axis represents income, then the answer is clear: Investment in ed annual earnings. 35)
What generalization about educational attainment and annual earnings can be made according to the graph?
A)
Investment in education can lead to higher annual earnings.
B)
Annual earnings remain constant for all educational degrees.
C)
A worker with some college earns more annually than a worker with an Associate's degree.
D)
Although a worker with a Professional degree earns more initially, the annual earnings decrease over time.
Stats 36)
Question Feedback
Correct
Voluntary exchange (like eBay) results in decentralized decision-making with buyersand sellers freely engaging in comme the internet, such transactions are occurring more and more frequently. 36) A)
New e-commerce businesses, including companies like eBay, focus on voluntary exchange. Which generalization BEST describes this type of co
Decentralized decision-making requires a large bureaucracy.
B)
Centralized decision-making produces dramatic economic output.
C)
Centralized decision-making results in buyers and sellers freely engaging in commerce.
D)
Decentralized decision-making results in buyers and sellers freely engaging in commerce.
Stats 37)
Question Feedback
Correct
This worker is completing one of many parts of a final product. Division of labor is a form of specialization. 37)
How does the activity in this image represent specialization?
A)
The products being produced are specialized for each worker.
B)
This worker is completing one of many parts of a final product.
C)
This worker is making a product that is different from that of other workers.
D)
This worker is performing many different steps in the production of a product.
Stats 38)
Question Feedback
Incorrect An oligopoly is a business organization in which the products in a market are supplied by only a few dominant producers. Though producers in the United States, most colas are made by Pepsi and Coke, or by companies that are owned by Pepsi and Coke. 38)
Which market structure is BEST indicated by the photograph?
A)
monopoly
B)
oligopoly
C)
pure competition
D)
modified competition
Stats 39)
Question Feedback
Correct
A decreased average level of safety for passengers would be least likely to be one of the effects of this act. Notice that the fir states that maintaining airline safety is the "highest priority" in the industry. Deregulation is an important aspect of a market economy. 39)
"[W]ith respect to interstate and overseas air transportation to consider the following as being in accordance with t
necessity: (1) the maintenance of safety as the highest priority in air commerce; (2) placing maximum reliance on
transportation services; (3) the encouragement of air service at major urban areas through secondary or satellite a
unreasonable industry concentration which would tend to allow one or more air carriers to unreasonably increase p
competition; and (5) the encouragement of entry into air transportation markets by new air carriers, the encourage markets by existing air carriers, and the continued strengthening of small air carriers."
- Public Law 95-504, "Airline Deregulation Act" The LEAST LIKELY result of the passage of the Airline Deregulation Act of 1978 was
A)
B)
C)
D)
Stats 40)
Question Feedback
Correct An insurance policy with a higher premium MOST LIKELY has a lower deductible. The premium is the cost of the insurance, while the loss that must be paid before the insurance company pays. 40) An insurance policy with a higher premium MOST LIKELY has
A)
a lower deductible.
B)
no liability limit.
C)
a higher deductible.
D)
a lower liability limit.
Stats 41)
Question Feedback
Correct One way to balance the trade deficit is to make domestic products more attractive to buyers, which can be the result of a foreigncurrency. 41) A Weak Dollar by The Columbus Dispatch, September 7, 1999
If the price of buying a car starts rising in the United States, consumers may need to look no further than the dolla foreign currencies.
On the other hand, economically depressed Midwestern farmers may find it easier to sell surplus grain overseas if a foreigners to buy U.S. goods.
The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen.. Euro. If the price of buying a foreign car in the U.S. rises as the passage suggests, which of the following results might balance the trade deficit?
A)
The price of foreign cars becomes more attractive to buyers.
B)
The price of domestic cars becomes more attractive to buyers.
C)
The high value of the yen encourages U.S. investment in Japan.
D)
Severe unemployment in the domestic car industry forces layoffs.
Stats 42)
Question Feedback
Correct
The vast majority of Australian economic decisions are made by the producers andconsumers of products. This is the primary c much like the economy of the United States. 42) Australia has one of the most advanced market economies in the world, meaning the majority of economic decisions are made by
A)
their executive branch of government.
B)
a central economic planning committee.
C)
their legislative branch of government.
D)
the producers and consumers of products.
Stats 43)
Question Feedback
Incorrect
A government subsidy will reduce production costs. Because of this, suppliers would be willing to produce more items. This will caus the right. 43) A) If the government decided to subsidize the production of bobble-head dolls
the cost of substitutes will rise.
B)
the supply curve will shift to the left.
C)
the price of bobble-head dolls will rise.
D)
the supply curve will shift to the right.
Stats 44)
Question Feedback
Correct
In a command economy the central government determines the prices of goods andservices. Business owners and supply and de in market economies. 44) A) In a command economy, how are the prices of goods and services determined?
business owners
B)
the central government
C)
market forces of supply and demand
D)
independent agencies and independent regulators
Stats 45)
Question Feedback
Correct
India chose to install a command economy when it first gained independence in 1947. Since that time, the government has loosen added numerous aspects of the market system. Today the nation has the world's fourth largest GDP, and ranks as the second fastest g 45) Which South Asian country is the BEST example of a mixed economy, in which there are elements of both market and command economies?
A)
India
B)
China
C)
Vietnam
D)
North Korea
Stats 46)
Question Feedback
Correct
A tax on retail products based on a set percentage of retail sale is a sales tax. The states set the amount of this tax for their statetype of tax! (Alaska, Delaware, Montana, New Hampshire, and Oregon) 46) A tax on retail products based on a set percentage retail cost is called
A)
sales tax.
B)
retail tax.
C)
income tax.
D)
corporation tax.
Stats 47)
Question Feedback
Incorrect
The market clearing price is where quantity demanded is equal to quantity supplied.The market clears at the price where ever purchased bybuyers willng and able to pay the price. Or, every seller who can produce at or below the market price, will find a buyer. 47) A) How do supply and demand influence market price?
Supply determines market price because the seller sets the price.
B)
The price is determined by the highest price consumers are willing to pay.
C)
The price is determined by the lowest price producers are willing to accept.
D)
The market clearing price is where quantity demanded is equal to quantity supplied.
Stats 48)
Question Feedback
Correct
Australia has increased its role in international trade significantly by reducing barriers to trade. This includes the lowering of imp to free trade. 48) A)
Since the 1980s, Australia has increased its role in international trade significantly. Which of these actions would have helped to achieve this resu
raising domestic taxes
B)
reducing barriers to trade
C)
focusing only on importing
D)
becoming politically liberal
Stats 49)
Question Feedback
Incorrect
The Federal Reserve, also called the Fed, is the central bank of the United States. The Federal Reserve consists of 12 regional Federal Board of Governors 49) A) What is the name of the "central bank" of the United States?
Bank of the U.S.
B)
The Federal Reserve
C)
U.S. Congressional Bank
D)
The Federal Bank of America
50)
Correct
Whole life insurance has a cash value that can be used in emergencies. Whole life doesn't pay out as much as term life in the even increases over time. 50) A) Which type of insurance has a cash value that can be used in emergencies?
property
B)
term life
C)
disability
D)
whole life
1)
Correct
The prospect of obtaining scarce resources is a major motivation for countries to tradewith one another. Some parts of the world mi certain raw materials. Instead, they might be able to trade their goods with a country that DOES have access to those resources. 1) Which of these is a major motivation for countries to trade with one another?
A)
decrease in wages
B)
access to illegal goods
C)
obtaining scarce resources
D)
higher costs to consumers
Stats 2)
Question Feedback
Incorrect
Many people desired high tariffs because they believed that their jobs and goodswould be protected from foreign competit protect theirmarkets and workers hoped to protect their jobs. 2) A)
In the late nineteenth century, American manufacturers and workers demanded the maintenance of a high tariff on goods imported into the Unite
they hoped to lower the price of imports.
B)
it would result in the lowering of domestic prices.
C)
they believed that their jobs and goods would be protected from foreign competition.
D)
it would improve trade relations with foreign countries with which they hoped to do business.
Stats
Question Feedback
3)
Correct
If the country follows a contractionary fiscal policy, it will reduce the size of its budget. Itneeds to spend less money and keep more to reduce government spending. Lowering the countrys discount rate would result in it having less money, since the discount rate is government charges on loans it makes to banks. The same is true of taxes. Lowering the price of securities relates to the countrys mon 3) A) The leaders of a small country decide that they need to enact a contractionary fiscal policy. Which action is consistent with this fiscal policy?
reduce taxes
B)
lower its discount rate
C)
reduce government spending
D)
lower the price of securities
Stats 4)
Question Feedback
Correct
Individual proprietorships are by far the most common form of business organization in the United States. Approximately threeU.S. are such organizations, though they account for about 5% of all sales in the country. 4)
According to the most recent Census, which business organization form is the MOST common in the United States, even through it is relatively i A)
C corporations
B)
dual partnerships
C)
subchapter S corporations
D)
individual proprietorships
Stats 5)
Question Feedback
Correct
In these examples, a fast food employee who works 40 hours a week making minimum wage would be impacted most negative regressive tax- such as asales tax- takes a larger percentage of a person's income as that income decreases. This is not necessarily the 5) A) A regressive tax would NEGATIVELY impact which of these people most?
B)
C)
D)
Stats 6)
Question Feedback
Correct
According to the law of demand, as price increases, the quantity demanded decreases and as price decreases, the quantity dema 6) The statement the quantity demanded of a product varies inversely with its price is a definition of
A)
laissez-faire.
B)
the law of demand.
C)
the invisible hand.
D)
the law of competition.
Stats 7)
Question Feedback
Correct
The tax on gasoline is considered an excise tax, which is an "inland" tax (as opposed to an import or border tax) on specific goods. Ex the producer onto the consumer, meaning that the price of the good rises in the amount of the tax. 7) A) Which specific tax is considered an excise tax?
tax on food
B)
tax on gasoline
C)
tax on clothing
D)
tax on prescriptions
Stats
Question Feedback
8)
Correct
According to the chart, individuals (households) spend their income in the productmarket. This income was earned in the factor m 8)
According to this diagram showing the circular flow of goods and resources, where do individuals spend the income they earn?
A)
in the factor market
B)
in the capital market
C)
in the product market
D)
in individual households
Stats 9)
Question Feedback
Correct
To compensate for greater risk, investors require higher returns for some investments. This is desire to be compensated more f in economics and in other real life situations. 9)
Why do investors require higher returns for some investments?
A)
to compensate for less risk
B)
to compensate for greater risk
C)
to invest less funds for less risk
D)
to offset the amount of money invested
Stats 10)
Question Feedback
Correct
A consumer good is one that is manufactured for general consumption. Therefore, thechain saw is the only consumer good on the invents a chain saw tree, then it will be a really, really cool capital good. 10) A) Which would be most likely to be a consumer good?
lumber
B)
iron ore
C)
chain saw
D)
a bale of cotton
Stats 11)
Question Feedback
Correct Stocks have both high risk and high potential return because those two concepts go together in investing. 11)
Based on the graph, which of the following statements is TRUE?
A)
B)
C)
D)
Stats 12)
Question Feedback
Correct
An opportunity cost is the next-best alternative you give up in order to do something else. This can be concert tickets you d new suit for a job interview, it can be NOT selling your land to a developer when you donate it to become acharity park, or it can be NO mindless television while youre studying for a graduation test. Every single decision that has ever been made has had an opportunity c 12) A) An opportunity cost is
usually absent in a command economy.
B)
when goods are recycled into other goods.
C)
the next-best alternative you give up in order to do something else.
D)
is only an issue when there is not a scarcity of goods and resources.
Stats 13)
Question Feedback
Incorrect
The CDC does not mandate vaccination of 100% of the people because at 100% vaccination coverage, the cost per case prev the marginal benefit. The marginal benefit needs to be greater than, or equal to, the marginal cost to be cost effective. 13)
The Center for Disease Control (CDC) evaluates the marginal cost effectiveness of vaccinating all people against certain diseases. If the margina generalization explains why the CDC does not mandate vaccination of 100% of the people? A)
At low vaccination coverage rates (0-70%), the marginal cost is greater.
B)
At high vaccination coverage rates (70-100%), the marginal cost is less.
C)
At 100% vaccination coverage, the cost per case prevented is less than the marginal benefit.
D)
At 100% vaccination coverage, the cost per case prevented is greater than the marginal benefit.
Stats 14)
Question Feedback
Correct
The workers in this photo MOST LIKELY representspecialization of labor. Throughspecialization or division of labor, a job is broke tasks to improve productivity. 14)
The workers in this photo MOST LIKELY represent
A)
capital goods.
B)
dependency ratio.
C)
specialization of labor.
D)
economic interdependence.
Stats 15)
Question Feedback
Correct
Although not beneficial for specific countries, trade deficits do NOT restrict internationaltrade. In fact, it generally means that a re going on, albeit at the expense of one country. 15) A) All of these restrict international trade EXCEPT
quotas.
B)
subsidies.
C)
embargoes.
D)
trade deficits.
Stats 16)
Question Feedback
Incorrect
It ensures continuous use of all available resources. The government owns the factors of production and is capable of respon 16) A) Which statement reflects an accurate argument in favor of a command economy?
It ensures continuous use of all available resources.
B)
It serves individual needs through profit motive.
C)
It maximizes the potential of a business cycle.
D)
It ensures an increase in aggregate wealth.
Stats 17)
Question Feedback
Correct
The federal government uses government spending and tax rates to help controlrecessions and encourage economic activity. This is used to influence the level of demand in the economy. 17) The federal government uses government spending and tax rates to help control recessions and encourage economic activity. This is called
A)
fiscal policy.
B)
monetary policy.
C)
D)
open market operations.
Stats 18)
Question Feedback
Correct
According to the author, the U.S. to China balance of trade in 2004 was roughly a $160 billion deficit. Remember the ba between exports andimports, not the total trade. If total trade was $231 and exports were $35, then imports must have totalled $196. minus imports, or $35-$196 = -$161, the negative implying the deficit. 18) United States Combating Use of Standards as Trade Barriers by Benjamin H. Wu, accessed from usinfo.state.gov/xarchives
While U.S. standards concerns are not specific to just China, because American industry has demonstrated a clear
in the Chinese marketplace, it is important that there is a standards development process that is open, transparent In 2004, China was the United States' third largest trading partner, with total merchandise trade between the two
imports were $196 billion]. The United States exported over $35 billion of merchandise to China, an increase of ove year. According to the author, the U.S.-China balance of trade in 2004
A)
B)
C)
D)
Stats 19)
Question Feedback
Correct
Trade barriers are BEST represented by the quote "You wish to free him from foreign competition" in the paragraph. Such "fr and duties on imported goods. 19) Excerpt from A Petition, published in 1845 by Frederic Bastiat
'From the Manufacturers of Candles, Tapers, Lanterns, Candlesticks, Street Lamps,....
To the Honorable Members of the Chamber of Deputies....
You are on the right track. You reject abstract theories and have little regard for abundance and low prices. You co
fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for dom Which quote BEST represents the idea of trade barriers?
A)
"You are on the right track."
B)
"You reject abstract theories"
C)
"You wish to free him from foreign competition"
D)
"[You] have little regard for abundance and low prices"
Stats 20)
Question Feedback
Correct When a demand curve moves to the right, as in this case, demand has increased. This might happen when there is a decrease in product. 20)
In the graph, what might explain the movement of the demand curve from D1 to D3? A)
B)
C)
D)
Stats 21)
Question Feedback
Correct
Because the cable provider is the only one, it is considered to have a monopoly. This is sometimes allowable if having competition the infrastructure of an area. 21) Many city governments grant operating licenses to a specific cable television company. This license to be the only cable provider is called a(n)
A)
monopoly.
B)
oligopoly.
C)
pure competition.
D)
monopolistic competition.
Stats 22)
Question Feedback
Correct
The equilibrium price is determined by looking at the intersection of the demand andsupply curves. In this graph that intersection is 22)
In the graph, the equilibrium price is approximately
A)
$1.00
B)
$3.00
C)
$5.00
D)
$6.00
Stats 23)
Question Feedback
Incorrect
With the development of a world market, workers must compete with workers in other countries whose wages are not as high as th Thus increasingglobal competition makes it difficult for U.S. workers to command higher wages. 23) A) Which of the following poses the greatest problem for unions in their attempts to gain higher wages and better benefits for their members?
increased union membership
B)
increasing global competition
C)
increase in number of skilled workers
D)
greater demand for the products they make
Stats 24)
Question Feedback
Incorrect
Many companies offer credit cards with compounding interest. Usually this is called the annual percentage rate, or APR. When the i frequently, balances on the credit card grows faster. 24) A)
Many companies offer credit cards with compounding interest. Usually this is called the annual percentage rate, or APR. When the interest is com
the APR will increase steadily over time.
B)
balances on the credit card grows faster.
C)
cash advance limits on the credit card decrease over time.
D)
the company receives less profit from the credit card balance.
Stats 25)
Question Feedback
Correct
NAFTA stands for North American Free Trade Agreement and is responsible for the increase in trade between Mexico and the US. The t also included Canada. 25)
According to the chart, what is the reason for the increase in trade between the US and Mexico?
A)
GATT
B)
NAFTA
C)
NATO
D)
WTO
Stats 26)
Question Feedback
Correct
"China's pending software procurement regulation" is a specific example of a tradebarrier. The word "regulation" implies that control the amount or kinds of software imported into the country. 26)
On May 13, 2005, Benjamin Wu, the Department of Commerce's assistant secretary for technology policy deliver Representatives Committee on Government Reform.
(excerpt)
"Mr. Chairman and members of the Committee, thank you for the opportunity to address your concerns on the use foreign governments.
Since standards and technical regulations affect over 80 percent of global commodity trade, domestic source restric
the form of standards as trade barriers, are a concern and have prompted the Department of Commerce to take re
The Department of Commerce is committed to ensuring that standards are fair and responsive to market and techn with industry to combat standards as trade barriers to American goods and services.
While U.S. standards concerns are not specific to just China, because American industry has demonstrated a clear
in the Chinese marketplace, it is important that there is a standards development process that is open, transparent In 2004, China was the United States' third largest trading partner, with total merchandise trade between the two United States exported over $35 billion of merchandise to China, an increase of over 25 percent over the previous
Tensions have arisen, however, when certain countries take restrictive action that could potentially exclude market regard, I have been asked by the Committee to address a specific example where China has caused great concern
of domestic source requirement standards - China's pending software procurement regulation which could limit the software products and services to the Chinese government. U.S. software companies, which are widely recognized
leading-edge innovation, have invested billions of dollars in China to participate directly in China's growing informa especially necessary to combat and offset the perceived high rate of software piracy in China.
The U.S. Department of Commerce, along with the Department of State and Office of the U.S. Trade Representativ ensure that U.S. software companies continue to have access to Chinese government customers. We will continue goal." Which quote from the passage represents a specific example of a trade barrier?
A)
B)
C)
D)
Stats 27)
Question Feedback
Incorrect
Although members of the EU may establish their own trade barriers, the European Unionestablished free trade for exports as par 2603/69. 27)
"This regulation lays down the principle that exports from the European Community to third countries are free...the quantitative restrictions." -European Community Council Regulation No. 2603/69 20 December 1969 Based on this passage, the European Union has established
A)
free trade for imports.
B)
free trade for exports.
C)
trade barriers for imports.
D)
trade barriers for exports.
Stats 28)
Question Feedback
Incorrect
The theory of supply-side economics holds that supply dictates demand: kind of if you make it, they will buy it. Reaganomics, 1980s, instituted its own brand of supply-side practices, including massive tax cuts to allow business to produce more and, subsequent
28) A)
The theory that the government can best stimulate the economy by helping businesses produce more is known as
Marxism.
B)
mercantilism.
C)
Keynesian economics.
D)
Stats 29)
Question Feedback
Correct
Bartering is the trading of goods and services without the use of money. In ancient history, people did not use money to exchange goo had not been invented yet. 29) In the most basic type of economic system, the trading of goods and services occurs without the use of money. What is this called?
A)
bartering
B)
socialism
C)
free enterprise
D)
involuntary exchange
Stats 30)
Question Feedback
Correct
Cuba is mostly a command economy: the government makes nearly all of the economic decisions for the people. Few private busin approximately 80% of its citizens are government employees. 30)
In which country would you MOST expect to find state-controlled industry, the greatest amount of restrictions on private business ownership, an the government?
A)
Brazil
B)
Canada
C)
Cuba
D)
Mexico
Stats 31)
Question Feedback
Incorrect
The BEST example of a regressive tax in the United States is the federal excise tax on gasoline. Most excise taxes affect the mi proportionally harder than the higher income groups. Other examples of regressive taxes would be a tax on cigarettes or alcohol- so-ca state sales taxes. 31) A) The BEST example of a regressive tax in the United States is
corporation tax.
B)
the state income tax.
C)
the federal personal income tax.
D)
Stats 32)
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Incorrect
The personal income tax provides between 40-45% of the state's revenue, making it the greatest percentage. The state sales tax and lottery funds arethird. Although property taxes provide the majority of revenue for counties, they are only a small part of the state 32) The money that the state government takes in is called revenue. Which of these sources provides the GREATEST percentage of revenue to meet
A)
sales tax
B)
property tax
C)
lottery funds
D)
personal income tax
Stats 33)
Question Feedback
Correct $1 gets you 10.34 pesos, so multiply $100 by 10.34 for the answer of 1034 pesos. This is known as an exchange rate. 33) Value of $1 U.S. in pesos is 10.34 Value of 1 Peso in U.S. Dollars is $0.09 Shelby traveled to Mexico to a resort and took $100 in U.S. currency. When she exchanged it for pesos, she received A)
10.3 pesos.
B)
103 pesos.
C)
900 pesos.
D)
1034 pesos.
Stats 34)
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Correct
Mr. Simpson would earn more money with compound interest because the amount on which interest is paid increases ove added to the balance earning interest. 34) A)
Mr. Simpson deposits his money in a savings account at the Springfield Bank. Would he earn more money with simple interest or with compoun
Simple interest earns more because simple interest always has a higher rate.
B)
He would earn the same amount, as these are different terms for the same thing.
C)
Simple interest earns more because the interest is determined annually on the original amount.
D)
Compound interest earns more because the amount on which interest is paid increases over time.
Stats 35)
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Incorrect
If the federal government wants to encourage businesses and consumers to spend moremoney, it would MOST LIKELY decrease th people more money to spend which would, in turn, spark the economy... ideally. 35) A) If the federal government wants to encourage businesses and consumers to spend more money, it would MOST LIKELY
increase the tax rate.
B)
decrease the tax rate.
C)
increase the reserve requirement.
D)
decrease government spending on goods and services.
Stats 36)
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Correct
There are a few main characteristics of monopolistic competition, most importantly that there are many producers and many consu consumers believe that there are non-price differences among the competitors' products. Therefore, the relevant example is one in whi cellular service based on the availability of a specific type of phone. 36) A) Which scenario BEST represents monopolistic competition?
B)
C)
D)
Stats 37)
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Incorrect
In the business cycle model, a recession is MOST LIKELY a period during which the real GDP decreases for two quarters in a called a "depression." 37)
In the business cycle model, a recession is MOST LIKELY
A)
a turnaround point where the real GDP stops going up.
B)
a turnaround point where the real GDP stops going down.
C)
a period during which the real GDP increases for two quarters in a row.
D)
a period during which the real GDP decreases for two quarters in a row.
Stats
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38)
Correct
Fiscal policy is how the government manages money to achieve specific goals, likeeconomic growth with stable prices. Public spen main components of fiscal policy. 38) A) The process by which the government manages spending and taxes to influence the direction of the economy is
tax policy.
B)
trade policy.
C)
fiscal policy.
D)
monetary policy.
Stats 39)
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Correct
Bob will MOST LIKELY increase his earnings potential in the long-term if he spendsmoney for additional training and education finances difficult, but over time he will likely make much, much more money than if he had not gone to school. 39) A) Bob would like to increase his earnings. The option MOST LIKELY to increase his earnings potential in the long-term is to
spend money to renew current training.
B)
take a similar position with a different company.
C)
spend money for additional training and education.
D)
laterally transfer to a different job within his company.
Stats 40)
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Correct
Pure competition exists when the market is not dominated by any one or group ofbuyers or sellers. There are very few exam agricultural products- such as sugar, rice, or vegetables- are good examples of this. 40) A) Which of these is the best economic definition of "pure competition"?
the market is dominated by one seller
B)
the market is dominated by a few buyers
C)
the market is dominated by two sellers or more sellers
D)
the market is not dominated by either buyers or sellers
Stats 41)
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Unanticipated inflation harms retirees who are living on fixed incomes more than the other groups. This is because their incom rising. 41) A) Of the following groups, the one hurt MOST by unanticipated inflation is
retirees who are living on fixed incomes.
B)
workers with cost-of-living adjustment contracts.
C)
banks who have made short-term adjustable rate mortgages.
D)
people who have invested savings in variable rate returns.
Stats 42)
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he skills MOST LIKELY needed to be successful in the workplace depend on the type of job. Each occupation has its own set of sk the worker. 42) A) The skills MOST LIKELY needed to be successful in the workplace
depend on the type of job.
B)
are dependent on the worker.
C)
are measured by the U.S. Census.
D)
must be attained by higher-level education.
Stats 43)
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Correct
As a communist country, Cuba has a great degree of a command economy. Though there is some foreign involvement in the econo overseen by the Cuban government. 43) A) Which country has the GREATEST degree of a command economy?
Brazil
B)
Canada
C)
Cuba
D)
Mexico
Stats 44)
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Correct
When a government funds programs at levels greater than the revenue it is receiving, the budget includes deficit spending. Income increase, and thenational debt increases. That a government is funding programs assumes that the budget has already been passed. 44) A) When a government funds programs at levels greater than the revenue it is receiving,
the national debt decreases.
B)
the income tax rates increase.
C)
the budget includes deficit spending.
D)
congress must submit a new budget for review.
Stats 45)
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Correct A person who made $3000 last year would have to pay $37.50 plus 3.000% over $2250according to the chart. Taxable Wages 45)
This chart shows the percentage of income tax that a person in Georgia must pay each year. The tax rate depends on how much a person makes e person who made $3,000 last year? A)
$7.50 plus 2.000% over $750
B)
$0.00 plus 1.000% over $0.00
C)
$37.50 plus 3.000% over $2250
D)
$82.50 plus 4.000% over $3750
Stats 46)
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Correct
ASEAN's Vision 2020 promotes free trade as a solution to unequal development. The ten nations of ASEAN, which account for 9% of th promote economic and cultural development. In recent years, some ASEAN nations have been criticized for not promoting human rights 46)
We will create a stable, prosperous and highly competitive ASEAN Region in which there is a free flow of goods, ser economic development and reduced poverty.
-ASEAN Vision 2020, Association of Southeast Asian Nations, 1997 What MIGHT be a solution to unequal development applied by ASEAN, according to Vision 2020?
A)
free trade
B)
democratic elections
C)
equal public education
D)
protection of religion and human rights
Stats 47)
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Correct
Corporations are able to sell stock thus raising capital for the company. Stockholders have limited liability. The establishment of p ofcorporations, for it would likely mean that the demand was greater than the supply (ashortage). 47) A) A corporation is LEAST LIKELY to have which advantage?
B)
C)
D)
Stats 48)
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Correct The federal personal income tax is an example of a progressive tax. A progressive taxmeans the rate of tax rises as income rises 48) A) The federal personal income tax is an example of what kind of tax?
regressive tax
B)
progressive tax
C)
value-added tax
D)
proportional tax
Stats 49)
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Correct
For investments, when the risk is high, the return is high. By definition, riskier investments have a greater chance of loss, ther encourage investors. 49) A) For investments, how are risk and return related?
When the risk is low, the return is high.
B)
When the risk is high, the return is low.
C)
When the risk is high, the return is high.
D)
When the risk is low, the return cannot be calculated.
Stats 50)
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Correct
"Marginal benefit" is directly related to opportunity cost. Remember that opportunity refers to what people are willing to give up in or Additionally, "marginal cost" directly relates to opportunity cost. 50) Marginal benefit: what consumers would be willing to give up in order to purchase or acquire one additional unit of a good.
"Marginal benefit" is MOST related to what economic concept?
A)
opportunity cost
B)
supply elasticity
C)
demand elasticity
D)
equilibrium price
1)
Hide
Correct
The graph would be used by someone who supports the North American Free TradeAgreement (NAFTA). NAFTA went into effect in 1994, and, according to the info increased somewhat steadily since that time. THe agreement eliminates tariffs on goods traded between the U.S., Mexico, and Canada. 1)
This graph would MOST LIKELY be used by one who
A)
opposes the end to minimum wage laws.
B)
opposes stopping illegal immigration.
C)
supports the North American Free Trade Agreement.
D)
support the passage of import duties on manufactured goods.
Stats
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2)
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Incorrect
When the Federal Reserve sells government securities on the open market, it collects payment from banks, which decreases the money banks have in their reserve Because there is less money, the interest rates increaseand it costs more to borrow money. On the other hand, when the Federal Reserve buys securities, it increases th causes interest rates to decrease. 2)
When the Federal Reserve sells government securities on the open market, what effect does this action have on the nations money supply and
A)
Money Supply - Decreases / Interest Rates - Increase
B)
Money Supply - Increases / Interest Rates - Increase
C)
Money Supply - Decreases / Interest Rates - Decrease
D)
Money Supply - Increases / Interest Rates - Decrease
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3)
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Correct
A)
B)
C)
D)
Stats
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4)
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A)
"business owner"
B)
"home owner"
C)
"employee"
D)
"student"
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5)
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Correct According to the information, one U.K. pound is worth approximately two U.S. dollars. Look at the entry at the top left of the chart. 5) Foreign Exchange Rates
According to the information, one U.K. pound is worth approximately
A)
one U.S. dollar.
B)
two U.S. dollars.
C)
four U.S. dollars.
D)
one-half of one U.S. dollar.
Stats
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6)
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Incorrect
According to the author, the U.S. to China balance of trade in 2004 was roughly a $160 billion deficit. Remember the balance of trade is the difference between ex total trade was $231 and exports were $35, then imports must have totalled $196. The balance of trade is exports minus imports, or $35-$196 = -$161, the negative imp 6) United States Combating Use of Standards as Trade Barriers by Benjamin H. Wu, accessed from usinfo.state.gov/xarchives
While U.S. standards concerns are not specific to just China, because American industry has demonstrated a clear interest to compete and part important that there is a standards development process that is open, transparent, participatory, and fair in China. In 2004, China was the Unit total merchandise trade between the two nations reaching $231 billion [US imports were $196 billion]. The United States exported over $35 bi of over 25 percent over the previous year. According to the author, the U.S.-China balance of trade in 2004
A)
B)
C)
D)
Stats
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7)
Hide
Correct
Whole life insurance has a cash value that can be used in emergencies. Whole life doesn't pay out as much as term life in the event of death, but the cash value incr
7)
Which type of insurance has a cash value that can be used in emergencies?
A)
property
B)
term life
C)
disability
D)
whole life
Stats
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8)
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Incorrect
Unanticipated inflation in the short term does NOT cause fixed incomes to increase more rapidly than the price level. In fact, increases in those incomes tend to lag 8) Unanticipated inflation can cause all of the following EXCEPT
A)
production of goods and services decreases.
B)
government gains tax revenue from income increases.
C)
debtors repay creditors with dollars that are worth less.
D)
fixed incomes increase more rapidly than the price level.
Stats
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9)
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Correct
The opportunity cost of a move from point A to point B is the decreased production of good Y. A move from point A to point B increases the output of good X, but a the opportunity cost. 9) The opportunity cost of a move from point A to point B is
A)
the increased production of good X.
B)
the increased production of good Y.
C)
the decreased production of good X.
D)
the decreased production of good Y.
Stats
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Fundamental Economic Concepts (SSEF1) Resources And Scarcity (SSEF2) Rational Decision Making
10)
Hide
Correct
John D. Rockefeller is synonymous with the business term trust. By buying out both the companies that competed against his company Standard Oil and those wh productive resources, he effectively killed any competition against him for decades. This is now legally prevented by US law and Supreme Court decisions in the past cen 10) This term is used to refer to a type of business organization created in the 19th century that was meant to eventually produce a monopoly.
A)
trust
B)
cartel
C)
laissez-faire
D)
pure competition
Stats
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11)
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Incorrect
If the Federal Reserve System lowered interest rates, more people would be able to borrow and spend money. More goods would be produced and unemployment work in the long run, however, since factors other than the monetary policy affect employment. 11) What would MOST LIKELY happen if the Federal Reserve System lowered interest rates?
A)
Trade would increase over the long run.
B)
Unemployment would be reduced in the short run.
C)
The demand for goods would decrease in the short run.
D)
The price of goods would remain stable over the long run.
Stats
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12)
Hide
Correct Rebates are a type of promotion designed to boost sales. Many types of businesses offer rebates, for example, the automobile industry. 12)
Carlos wants a new cell phone. If he mails in his proof of purchase to receive money back, what type of promotion designed to boost sales is th
A)
coupon
B)
rebate
C)
bait and switch
D)
direct-mail advertising
Stats
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13)
Hide
Correct
One difference between a manager and an entrepreneur is that an entrepreneur is willing to take a financial risk. A manager would work for the entrepreneur and could wages. Entrepreneurs, though, invest their own money into the business, meaning their livelihood is based on the success of the undertaking. 13) One difference between a manager and an entrepreneur is that an entrepreneur is willing to
A)
take a financial risk.
B)
lead rather than follow.
C)
be cautious and methodical.
D)
manage a large group of people.
Stats
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14)
Hide
Correct
A)
free trade.
B)
trade barriers.
C)
trade incentives.
D)
Stats
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15)
Hide
Correct
A)
increase.
B)
decrease.
C)
remain stable.
D)
Stats
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16)
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Correct
Surplus grain is an example of absolute advantage. It might also be considered acomparative advantage if the U.S. produces the grain relatively more efficiently tha 16) A Weak Dollar by The Columbus Dispatch, September 7, 1999
The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen...It also has lost ground to the According to the passage, Midwestern farmers have surplus grain to sell. This is an example of
A)
business cycle.
B)
comparable worth.
C)
infant industries.
D)
absolute advantage.
Stats
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International Economics (SSEIN1) Trade (SSEIN3) Exchange Rates
17)
Hide
Incorrect
When banks offer higher rate of return to investors, the MOST LIKELY impact on borrowers is an increased interest rate for borrowing money. Banks, of course, hav 17) If a bank is offering a higher interest rate of return to investors, the MOST LIKELY impact on borrowers from the same bank is
A)
a decreased savings rate.
B)
an increased savings rate.
C)
a decreased interest rate.
D)
an increased interest rate.
Stats
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18)
Hide
Correct
In the stock market, a bear market occurs when the value of most listed shares of stock or other financial instruments falls consistently causing a decrease in investment market, which was preceded by a general bull market. 18)
If you purchase AT&T stock at $100 a share in August, and each month AT&T stock falls consistently, what would BEST describe the stock marke
A)
Bear Market
B)
Bull Market
C)
Inflated Market
D)
Deflated Market
Stats
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19)
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Incorrect
Opportunity cost is defined as the value of an alternative not chosen. Since Mr. Stevenschose not to rent his building he is giving up the the income he would receiv 19)
Mr. Stevens owns a building in downtown Bentonville. He has considered opening a sporting goods store in the building but has also been appr the space to open a gym. If Mr. Stevens decides to open his sporting goods store, what is the opportunity cost of this decision?
A)
the property tax he would pay on the building
B)
the opportunity he has to run his own business
C)
the income he would receive as rent from the tenant
D)
the profits he would make from his sporting goods store
Stats
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20)
Hide
Correct
By showing what businesses and households bring to and take from the product andfactor markets the chart shows how households and businesses interact in a m 20) The diagram shows the circular flow of goods and resources. What is the primary purpose of this chart?
A)
It shows the relationship between supply and demand.
B)
It indicates the changing tastes in the product market.
C)
It shows how households and businesses interact in a market economy.
D)
It shows the need for government intervention in any economic system.
Stats
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21)
Hide
Correct Although age at purchase date may be a factor, it is not listed on the chart, and is therefore the answer. 21)
According to the chart, all of the following are factors to consider when purchasing insurance and/or annuities EXCEPT
A)
pay out options.
B)
purpose for buying.
C)
age at purchase date.
D)
taxable contributions and pay outs.
Stats
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22)
Hide
Correct
The MOST LIKELY incentive for entrepreneurs to start a new business is to make a profit. Although they may create a new patent or social benefit, these are not the 22) The MOST LIKELY incentive for entrepreneurs to start a new business is
A)
to make a profit.
B)
C)
D)
Stats
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23)
Hide
Incorrect Ben should choose account X because, since it uses compound interest, it would pay interest on interest. Simple interest only pays on the original balance. 23)
Ben is choosing between two savings accounts. Both accounts pay 3% interest. Account X pays compound interest. Account Y pays simple inter
A)
the interest would be tax free.
B)
it would pay interest on interest.
C)
the interest rate would decrease over time.
D)
the interest rate would increase over time.
Stats
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24)
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Correct
As more people have gained access to computers and good internet connections, the business world has seen more people teleworking from home. This causes les and, often, happier workers. Plus, you can wear your pajamas and still get paid! 24)
Which of these is the MOST significant impact of the wide availability of computers and high-speed internet connections since the start of the 2
A)
an increase in television sales
B)
a decrease in college graduates
C)
more people teleworking from home
D)
renewed interest in the space program
Stats
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25)
Hide
Correct
Though it did not start out with this name, The European Union was created in the aftermath of World War II. It is now an organization designed to make trade betw 25) This map shows the organization that was started out as six countries after World War II but has grown into an economic association of nearly organization?
A)
NATO
B)
SEATO
C)
the European Union
D)
the United Nations
Stats
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26)
Hide
Correct Businesses sell the goods and services they produce in the product market. Individuals exchange money (income they have earned) for these goods and services. 26) According to the diagram showing the circular flow of goods and resources, where do businesses sell the goods and services they produce?
A)
B)
C)
D)
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27)
Hide
Correct Money can be easily converted into goods or services.This is an example of the function of money being used as a medium of exchange 27) Money can be easily converted into goods or services. This is an example of which "function of money"?
A)
store of value
B)
measure of value
C)
medium of exchange
D)
commodity transfer
Stats
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28)
Hide
Correct After 2 years of 5% on your original $200, your account balance is about $220.Technically it would be $220.50. 28)
Your savings account pays 5% simple interest. You opened your savings account with $200, and did not add any additional deposits. After 2 yea
A)
$205.
B)
$210.
C)
$220.
D)
$235.
Stats
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29)
Hide
Correct
According to the information on the washboard mussel harvest, the approximate price for mussels in 1993 was $1.50 per pound. The price can be found on the righ 29) According to the information on the washboard mussel harvest, the approximate price for mussels in 1993 was
A)
$0.25 per pound.
B)
$1.50 per pound.
C)
$40 per pound.
D)
$600 per pound.
Stats
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30)
Hide
Correct
A monetary policy of low interest rates MIGHT impact consumers because it lowers savings rates. A lower interest rate results in a smaller return on savings and a boost extended periods of low interest rates is inflation, notdeflation. 30) How does a monetary policy of low interest rates affect consumers?
A)
It promotes deflation.
B)
It lowers savings rates.
C)
It lowers spending rates.
D)
It lowers the cost of imports.
Stats
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31)
Hide
Correct
The the Port of Savannah is one of the country's fastest growing. With the already large numbers of ships coming in to unload their cargo each year increasing annu would be associated with that process. 31) The economy of Chatham County would MOST LIKELY be influenced by
A)
an international airport.
B)
the Port of Brunswick.
C)
the Port of Savannah.
D)
a subway system.
Stats
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32)
Hide
Correct $1 gets you 10.34 pesos, so multiply $100 by 10.34 for the answer of 1034 pesos. This is known as an exchange rate. 32) Value of $1 U.S. in pesos is 10.34 Value of 1 Peso in U.S. Dollars is $0.09 Shelby traveled to Mexico to a resort and took $100 in U.S. currency. When she exchanged it for pesos, she received
A)
10.3 pesos.
B)
103 pesos.
C)
900 pesos.
D)
1034 pesos.
Stats
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33)
Hide
Incorrect
Juan is weighing the marginal benefits of an extra hour of studying, five additional points on the test,with the marginal cost, one hour of sleep. This type of cost benefit a 33)
Juan realizes that if he studies an extra hour for his test, he will score five points higher. For each extra hour spent studying, he is getting one ho spend an additional hour studying or sleeping, Juan is engaged in what economic activity?
A)
bartering
B)
marginal analysis
C)
market transactions
D)
trade negotiations
Stats
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34)
Hide
Correct If OPEC reduced production, oil prices would probably rise in response to the reducedsupply. 34) If OPEC decided to cut oil production for the coming year, what would be the MOST LIKELY effect?
A)
prices would not change
B)
oil prices would probably rise
C)
oil prices would probably decline
D)
the price for substitute products would decline
Stats
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35)
Hide
Correct All of the points represent possible product output EXCEPTpoint D. A company cannot produce a combination of X and Y that lies outside of the curve. 35) A company produces two products, X and Y. All of the points represent possible product output EXCEPT
A)
point A.
B)
point B.
C)
point C.
D)
point D.
Stats
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36)
Hide
Correct
A)
B)
C)
D)
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37)
Hide
Correct
Apple, along with several other American computer companies, has combined US research and design with mostly Asian production to create the newest computing an economic age, this production model will likely become more and more common. 37)
In 2007, Apple Inc. released the first iPhone which served as a combination mobile phone, digital camera, and music player and offered some b similar to some other recent computer and communications products because it is an example of
A)
100 percent US research, design, and production.
B)
US research and design with mostly Asian production.
C)
Asian research and design with mostly US production.
D)
European research and design with mostly US production.
Stats
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38)
Hide
A)
mixed economy.
B)
market economy.
C)
command economy.
D)
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39)
Hide
Correct
The United States government does not act as a central planner deciding what to produce. In a market economy such as the United States, decisions concerning wh producers in response to market conditions. Central planning is a characteristic of socialist and communistic economies. 39) The United States government is LEAST LIKELY involved in the nations economy as a
A)
consumer of goods and services.
B)
planner deciding what to produce.
C)
protector against false advertising and environmental hazards.
D)
regulator charged with preserving competition in the marketplace.
Stats
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40)
Hide
Correct According to the information presented in this map, the U.S. has free trade agreements with many foreign nations. These free trade agreements eliminate tariffs, most goods and services traded between the nations. 40)
MAP KEY: Blue- United States Green- Current Free Trade partner Orange- Proposed Free Trade partner Which statement BEST summarizes the information presented in this map?
A)
Many nations refuse to trade with the United States.
B)
The value of US exports exceeds the value of imports.
C)
The U.S. has free trade agreements with many foreign nations.
D)
Europe is the most important participant in free trade with the U.S.
Stats
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41)
Hide
Incorrect
The Telecommunications Act of 1996 is MOST LIKELY an example of deregulation. "To promote competition"is the key to the answer. 41)
To promote competition...in order to secure lower prices and higher quality services for American telecommunications consumers and encoura telecommunications technologies.
-Telecommunications Act of 1996 The Telecommunications Act of 1996 is MOST LIKELY an example of
A)
regulation.
B)
divestiture.
C)
deregulation.
D)
market failure.
Stats
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42)
Hide
Correct
During hard economic times, banks and other lenders try to avoid risky business ventures. Loans are made less frequently and when credit is extended, banks and le backing and/or collateral. For this reason, prospectivebuyers may find it difficult to get financing. 42) In a weak economy, the sale of lands for development may experience a slowdown. What is the MOST LIKELY reason this might happen?
A)
Land owners want very high prices for the land.
B)
Business owners take more chances during a slowdown.
C)
Prospective buyers may find it difficult to get financing.
D)
Private financial institutions try to stop the sale of lands.
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43)
Hide
Correct
A)
land.
B)
capital.
C)
goods and services.
D)
Stats
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44)
Hide
Correct
Protectionist trade policies are designed to protect domestic industry by reducingimports and making foreign products less attractive to consumers through tariffs 44) "Protectionist" trade policies are designed to
A)
increase imports.
B)
protect domestic industry.
C)
reduce tariffs on foreign products.
D)
increase government transfer payments.
Stats
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45)
Hide
Correct
A receipt showing that an investor has made an interest-bearing loan to a bank is acertificate of deposit. They are similar to savings accounts in that they are insure the FDIC for banks or by the NCUA for credit unions). 45) A receipt showing that an investor has made an interest-bearing loan to a bank is a
A)
bond.
B)
pension.
C)
savings account.
D)
certificate of deposit.
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46)
Hide
Correct A government that operates a market economy MIGHT become involved in the economyto provide public goods and services to its citizens. In a market economy, individuals answer the basic economic questions. 46) A government that operates a market economy MIGHT become involved in the economy
A)
to increase the profits of a specific company.
B)
to eliminate income inequality among its citizens.
C)
to make sure all products are produced the same way.
D)
to provide public goods and services to its citizens.
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47)
Hide
Correct
Fiscal policy is BEST DESCRIBED as actions by the federal government to use spending and revenue collection to influence the economy. "Revenue collection" is ju
47)
Fiscal policy is BEST described as
A)
B)
C)
D)
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48)
Hide
Correct Since the 1970s, scientists and environmentalists have warned consumers that supplies ofmetals and fossil fuels are being depleted. 48)
Nations, governments, corporations, and individuals are reassessing their use of two natural resources that are expected to one day be deplete
A)
trees.
B)
stone.
C)
metals.
D)
water.
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49)
Hide
Correct Wages would decline as the competition for jobs increases. Workers and their wages follow the same laws of supply and demand as other products in the market. 49)
If the supply of computer engineers increases at the same time that the demand for these workers decreases, what would be the MOST LIKELY
A)
B)
C)
D)
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50)
Hide
Correct $.25 is the market clearing price or the equilibrium price. At $.25, quantity demandedwas equal to quantity supplied. 50)
On the first day of school, the school store had 100 pencils for sale at $1 each. At the end of the week, there were 90 pencils left. The second w each. At the end of the week, there were 75 pencils left. The store dropped the price $.25 each week, and at the end of the fourth week, there market clearing price?
A)
$.25
B)
$.50
C)
$.75
D)
$1
Correct
Monetary policy is BEST described as actions by the Federal Reserve System to expand or contract the money supply. Controlling interest rates is a key componen 1) Monetary policy is BEST described as
A)
B)
C)
D)
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2)
Correct
India chose to install a command economy when it first gained independence in 1947. Since that time, the government has loosened control over the economy, and the market system. Today the nation has the world's fourth largest GDP, and ranks as the second fastest growing economy in the world. 2) Which South Asian country is the BEST example of a mixed economy, in which there are elements of both market and command economies?
A)
India
B)
China
C)
Vietnam
D)
North Korea
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3)
Correct
In a market economy, a high price is a signal for producers to supply more andconsumers to buy less. If a price is set TOO high, though, then consumers will buy les 3) In a market economy, a high price is a signal for
A)
B)
C)
D)
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4)
Incorrect This worker is completing one of many parts of a final product. Division of labor is a form of specialization. 4) How does the activity in this image represent specialization?
A)
The products being produced are specialized for each worker.
B)
This worker is completing one of many parts of a final product.
C)
This worker is making a product that is different from that of other workers.
D)
This worker is performing many different steps in the production of a product.
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5)
Correct According to the graph, education & skill are most important in raising laborproductivity. See: your parents and teachers are right! 5) According to the information from the U.S. Department of Labor, which factor has the GREATEST impact on raising labor productivity?
A)
research & development
B)
education & skill
C)
profit sharing
D)
recruitment
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6)
Correct
The law of demand is one of the most famous laws in economics. It states that when theprice of a good rises, the amount demanded falls, and when the price of a g 6)
The law of demand is one of the most famous laws in economics. It states that when the price of a good rises, the amount demanded ________ the amount demanded _____________.
A)
rises, rises
B)
falls, falls
C)
rises, falls
D)
falls, rises
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7)
A)
"business owner"
B)
"home owner"
C)
"employee"
D)
"student"
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8)
Incorrect
The Federal Reserve is primarily responsible for the control of the money supply in the United States. It regulates the amount of money that enters the nations eco 8) Which of these is primarily responsible for the control of the money supply in the United States?
A)
the U.S. Treasury
B)
the Federal Reserve
C)
the executive branch
D)
the legislative branch
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9)
Correct
According to the passage, house cleaneris an example of unskilled labor. It is the only position that does not specify some kind of qualification as a requisite to being 9) Help Wanted Ads
Established company seeking full-time residential house cleaner. We will train. Must be honest and dependable. Call (123) 456-7890.
Suburban medical facility seeking surgeon. Board Certified required. $1,000 signing bonus for every year of experience, up to $15,000. Send res
Temporary lifeguard needed to fill summer holiday shifts at outdoor swimming pool. Must have CPR and lifeguard certification. Apply in person GA.
Aircraft manufacturer seeking engineers with advanced degree in physics and no less than 15 years experience. Many positions available. Send According to the passage, which of the following help-wanted positions is an example of unskilled labor?
A)
surgeon
B)
engineer
C)
lifeguard
D)
house cleaner
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10)
Correct
An example of credit is when a person borrows money from a finance company to buy a car. Once credit is extended to a person and is used for a purchase, the credit i the financial obligation to repay the loan. 10) What is an example of credit?
A)
B)
C)
A person deposits a paycheck into a savings account.
D)
A person pays interest on an existing mortgage.
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11)
Incorrect
When limited resources can be used to produce a combination of items, a productionpossibilities graph shows how many of each item could be produced with the 11) The purpose of this production possibilities graph is to show
A)
how supply and demand determine price.
B)
whether the supply of goods is elastic or not.
C)
the number of workers required for a specific task.
D)
how limited resources can be used to produce a combination of items.
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12)
Correct
When a demand curve moves to the right, as in this case, demand has increased. This might happen when there is a decrease in the price of a complementary prod 12) In the graph, what might explain the movement of the demand curve from D1 to D3?
A)
B)
C)
D)
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13)
Correct Countries around the world specialize production, and trade with other countries based upon the comparative advantage in production. 13) Countries around the world specialize production, and trade with other countries based upon
A)
B)
C)
D)
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14)
Correct
Developing countries refers to those nations that, in older terminology, were once called Third World Economies. There are more of these than there are develo them to become self-sufficient is a major aim of economic development. 14) Countries with a low standard of living, little industrial output, and a low Gross Domestic Product are referred to as
A)
command economies.
B)
developed countries.
C)
developing countries.
D)
plantation economies.
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15)
Correct
A proportional tax is one in which the tax rate that is fixed for all people. In other words, if you make $30,000 annually you are taxed at a rate of 20% (for example). And your tax rate would still be 20%. This is not the sameamount, but it is the same tax rate. 15) Which of these is the BEST definition of a proportional tax?
A)
a tax that is based on a percentage of a person's income
B)
a tax rate that depends upon a person's purchases
C)
a tax that is the same amount for everyone
D)
a tax rate that is fixed for all people
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16)
Correct
The farmers' bartering for goods is an example of a traditional market structure found in early America. Many different market structures existed in the same places at t barter, but could also sell goods in local stalls. 16) In early America, farmers exchanged goods they produced for goods they needed. What type of market structure is this an example of?
A)
monopoly
B)
oligopoly
C)
traditional
D)
free competition
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17)
Correct
According to the Law of Demand, when there is a decrease in price there will be an increase in the quantity demanded of that product. 17) A decrease in the price of a particular product will result in
A)
B)
C)
D)
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18)
Correct Lower-income families may be unable to afford private health insurance. That might BEST account for why approximately 15% of the population is without health 18)
According to the U.S. Census Bureau, 85% of Americans have health insurance. Which generalization might BEST account for why approximatel insurance?
A)
Lower-income families may be unable to afford private health insurance.
B)
Older Americans usualy decide they do not need or want health insurance.
C)
High-income families use most of the funds reserved for public health insurance programs.
D)
A greater percentage of the population in the northeast are less likely to need insurance.
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19)
Correct
A)
B)
C)
10
D)
11
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20)
Incorrect
In following the "laissez faire" business philosophy, it stands to reason that the U.S. government had little or no influence on business and industry. This resulted in but not a good amount of prosperity for the people working in those industries.
20)
What impact did U.S. governmental polices have on business and industry during the late 1800s?
A)
The U.S. government regulated industry for the public good.
B)
The U.S. government had little or no influence on business and industry.
C)
The U.S. government tried to limit and regulate industrial and business growth.
D)
The U.S. government tried to control public and private utilities and transportation.
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21)
Incorrect
The abolition movement was a product of the early and mid-nineteenth century. While it did eventually see its goal of the end of slavery, the other choices are mor question. 21) Which of these would have had the LEAST effect on late nineteenth century American industrialization?
A)
the abolition movement
B)
large numbers of immigrants
C)
improvements in communications
D)
the development of better transportation systems
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22)
Correct
The MOST LIKELY result of government programs to address the Great Depression in the United States was that deficit spending increased. Other than a short period of the federal government has been in debt. 22) The MOST LIKELY result of government programs to address the Great Depression in the United States was that
A)
B)
C)
D)
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23)
Incorrect
Voluntary exchange (like eBay) results in decentralized decision-making with buyersand sellers freely engaging in commerce. Thanks to the popularity of the intern and more frequently. 23)
New e-commerce businesses, including companies like eBay, focus on voluntary exchange. Which generalization BEST describes this type of com
A)
Decentralized decision-making requires a large bureaucracy.
B)
Centralized decision-making produces dramatic economic output.
C)
Centralized decision-making results in buyers and sellers freely engaging in commerce.
D)
Decentralized decision-making results in buyers and sellers freely engaging in commerce.
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24)
Correct
A)
B)
C)
D)
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25)
Incorrect
Freedom to own the factors of production, subsidized transportation services, and involuntary spending and investments are examples of mixed economies. The su a command economy, the freedom to own productive resourcesis a market example, and the involuntary spending is found in a traditional economy. 25) Freedom to own the factors of production, subsidized transportation services, and involuntary spending and investments are examples of
A)
mixed economies.
B)
market economies.
C)
command economies.
D)
traditional economies.
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26)
Correct
The bank would like to earn a profit by charging interest. Interest is the payment a bank receives when it lends someone money. Banks, like other businesses, want to m 26) Which of these is the BEST explanation for why banks loan money to individuals?
A)
The bank would like to earn a profit by charging interest.
B)
The government requires that banks give money to applicants.
C)
The bank would like to take a risk and support an entrepreneur.
D)
The bank would like to borrow money from the Federal Reserve System.
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27)
Correct The quantity supplied increases as price increases and decreases as price decreases. Therefore, they are directly related.> 27) What is the relationship between quantity supplied and price?
A)
They are not related.
B)
They are directly related.
C)
They are inversely related.
D)
They are related through demand.
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28)
Correct
Based on the discussion of high trade costs, the presence of numerous tariffs, and problems with customs procedures and duties it is clear that the author feels that
challenge facing Africa's international trade success. 28) Trade Costs in Africa
World Bank Document, September 2008
High trade costsfor transporting goods and getting them across bordershave a negative impact on prospects for expanding African trade, m
While reducing tariffs and other trade barriers remains important, and must continue as part of the liberalization process, many African countr unless trade costs are reduced.
Bottlenecks in the form of regulatory and administrative constraints to transport and transit must also be reduced. Customs procedures, duty d push up the cost of trade. Which statement would MOST LIKELY be claimed by the author of this passage?
A)
That man-made trade barriers are the biggest challenge facing Africa's international trade success.
B)
That agricultural, industrial, and service sector reforms must be made for Africa to trade internationally.
C)
The solution to Africa's international trade problems must be dictated by the United Nations and the World Trade Organization.
D)
Environmental factors such as drought and desertification are the major challenges facing Africa's international trade development.
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29)
Correct
If the federal government uses a Keynesian model to fund US government programs, the result MIGHT be a higher national debt. The Keynesian model was promoted fo early 1970s. It has made a resurgence in the economic crises facing the US since 2007. The national debt continues to increase at exponential rates. 29)
Early Keynesian theorists developed the balanced budget multiplier, which suggests that an equal increase in government spending and tax rev precisely the increase in the amount spent.
If the federal government uses a Keynesian model to fund US government programs, what MIGHT be the result?
A)
Higher national debt
B)
Reduction of federal income tax
C)
Decreased government spending on programs
D)
A push for a balanced federal budget amendment
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30)
Incorrect
Through the The African Free Trade Zone, the leaders of COMESA, EAC, and SADC hope to create a single free trade zone consisting of 26 countries with a GDP of an African Free Trade Zone agreement would ease access tomarkets within the AFTZ zone and end problems arising from the fact that several of the member countries in th 30)
A major step toward economic cooperation among African nations came in 2008 when the Common Market for Eastern and Southern Africa (C and the Southern African Development Community (SADC) announced the creation of ________________________ to strengthen and support
A)
the African Free Trade Zone
B)
the African Economic Community
C)
the United Nations Economic Commission for Africa
D)
the Treaty for Establishment of the East African Community
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31)
Incorrect
This law of economics is known as comparative advantage. According to this law "Mutually beneficial exchange is possible whenever relative production costs differ prio 31)
Because Nebraska specializes in the production of corn and Maine specializes in the production of lobsters, the two states could engage in trad economics is known as
A)
supply and demand.
B)
parallel consumption.
C)
comparative advantage.
D)
relative distribution.
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32)
Correct
An insurance policy with a higher premium MOST LIKELY has a lower deductible. The premium is the cost of the insurance, while the deductible is the amount of th insurance company pays. 32) An insurance policy with a higher premium MOST LIKELY has
A)
a lower deductible.
B)
no liability limit.
C)
D)
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33)
Incorrect
A price ceiling (a maximum price which may be charged) is usually a price set below the current market price. This means that since the price is set a little too low th amount initially supplied. 33) A price set below the current market price is a characteristic of a
A)
price floor.
B)
regular price.
C)
price ceiling.
D)
equilibrium price.
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34)
Correct
The fact that nations voluntarily quit buying South African oil makes this an example of anembargo. An embargo is a type of trade barrier designed to put pressure on a n suffer economically. 34)
In 1987, the United Nations General Assembly passed a resolution that prohibited countries from buying oil from South Africa in an effort to pe of apartheid. This is an example of a(n)
A)
blockade.
B)
embargo.
C)
quota.
D)
tariff.
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35)
Correct
The 1980s MOST displayed which economic trend? A)
socialism
B)
democracy
C)
increased governmental control deregulation of major industries

A finance company agrees to loan money to a buyer for a new washer and dryer. What is this an example of? A)
The finance company is assuming a new debt.
B) D)
The finance company is extending credit to a buyer.
The concept of comparative advantage makes the assumption that everyone will be better off A)
producing enough of a specific final good to export.
B)
producing the products they produce relatively best.
Capital, one of the factors of production, includes the equipment used in the production ofgoods. 35)
Mr. Green is opening a new bakery. He has purchased an industrial oven which can accommodate twenty loaves of bread at a time. This oven r
A)
capital
B)
entrepreneurship
C)
labor
D)
land
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36)
Correct Inflation reduces the value of money. Creditors will be paid back with money that is worth less than the money they loaned at the fixed rate. 36) Inflation is most harmful to
A)
debtors.
B)
creditors.
C)
wage earners.
D)
property owners.
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37)
Correct
Supporters of free trade- such as represented by NAFTA- contend that it stimulatedemocratic reform and open markets in areas in need of improvement. In the U
in Mexico, but arguments about the merits of free tradeare usually accompanied by political partisanship. 37) Supporters of NAFTA and free trade would contend that such agreements
A)
increase government control of a nation's economy.
B)
limit the growth of an economy and prevents inflation.
C)
stimulate democratic reform and open markets in areas in need of improvement.
D)
bring an increase in economic control of the most powerful people in a country.
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38)
Correct
When consumers prefer a specific brand-- even when others are available at a lower price-- because of its different kind of features, it is an example of monopolisti category, which consists of a number of companies that offer similar types of products. 38)
Many companies sell different types of cell phones. Some consumers prefer to use a specific brand because of its different kind of features. Thi
A)
monopoly.
B)
oligopoly.
C)
pure competition.
D)
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39)
Correct This is microeconomic law states that, if everything else is equal, the quantity of a good supplied rises as the price rises. This is done to maximize profits. 39) Which relationship is the BEST example of the Law of Supply?
A)
The quantity of a good supplied rises as the price rises.
B)
The quantity of a good supplied rises as the price falls.
C)
The quantity of a good supplied falls as the price rises.
D)
The quantity of a good supplied is not impacted by price.
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40)
Incorrect
The government raises taxes to fund programs that benefit the public. Garbage collection, highway construction, public education, and national defense are all help Political campaigning is primarily helpful to individuals running for office, and is therefore not funded by taxes. Private education and business expansion do not necessa
40)
Which of these projects would MOST LIKELY be funded by the government using tax money?
A)
private education
B)
business expansion
C)
garbage collection
D)
political campaigning
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41)
Incorrect Since everyone paid the same effective tax rate up to a certain point, , this would be aproportional tax up to $87,000. After that it would be a progressive tax. 41)
In 2003, the Social Security component of the Federal Insurance Contributions Act (FICA) was 6.2 percent of wages and salaries up to $87,000. A were not collected, regardless of income. Because Social Security tax was capped in 2003, it was
A)
graduated up to $87,000.
B)
regressive up to $87,000.
C)
progressive up to $87,000.
D)
proportional up to $87,000.
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42)
Incorrect An oligopoly exists when a few firms dominate an entire industry. 42) Columbia Tires and Pacific Tires together control 75% of the tire market in the country. This is an example of what type of market structure?
A)
monopoly
B)
oligopoly
C)
perfect competition
D)
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43)
Correct
The graph would be used by someone who supports the North American Free TradeAgreement (NAFTA). NAFTA went into effect in 1994, and, according to the info increased somewhat steadily since that time. THe agreement eliminates tariffs on goods traded between the U.S., Mexico, and Canada. 43)
This graph would MOST LIKELY be used by one who
A)
B)
C)
D)
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44)
Correct Tax rebates put money in the hands of taxpayers. The government hopes that this will result in increased consumer spending which will stimulate the economy. 44) The United States government has decided to issue federal income tax rebates to taxpayers. What is the MOST LIKELY goal of these rebates?
A)
increased consumer spending
B)
increased transfer payments
C)
reduction in the employment rate
D)
reduction in the military budget
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45)
Correct
Bartering is the trading of goods and services without the use of money. In ancient history, people did not use money to exchange goods and services because money ha 45) In the most basic type of economic system, the trading of goods and services occurs without the use of money. What is this called?
A)
bartering
B)
socialism
C)
free enterprise
D)
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46)
Correct Shanna would need proof of property insurance for a mortgage. This would protect not only her house but the goods she possesses inside of the house. 46) Shanna's mortgage company requires insurance coverage. Which type of insurance would she need?
A)
automobile
B)
disability
C)
life
D)
property
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47)
Correct
All of these are examples of human resources. There is skilled labor (programmer) andunskilled labor (digger), but all three- including the financier who uses money give their efforts to get something produced. 47) ditch digger computer programmer international financier ALL of these are examples of
A)
skilled labor.
B)
human resources.
C)
unskilled labor.
D)
capital resources.
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48)
Correct In promoting free trade, the author is MOST LIKELY arguing for fair and responsive standards to reduce trade barriers. Trade barriers limit free trade. 48) United States Combating Use of Standards as Trade Barriers by Benjamin H. Wu, accessed from usinfo.state.gov/xarchives
The U.S. Department of Commerce, along with the Department of State and Office of the U.S. Trade Representative, have been working hard to continue to have access to Chinese government customers. We will continue to work vigorously to achieve this goal. In promoting free trade, the author is MOST LIKELY arguing
A)
for fair and responsive standards to reduce trade barriers.
B)
for fair and responsive standards to increase trade barriers.
C)
for higher standards on Chinese goods to reduce software piracy.
D)
for lower standards on Chinese goods to decrease investment by U.S. companies in China.
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49)
Correct
A regressive tax is BEST defined as a rate of tax that falls as income rises. A prime example of a regressive tax is a sales tax, for those with lower incomes see a great
sales tax than do those with higher incomes. 49) A regressive tax is BEST defined as a rate of tax
A)
that falls as income rises.
B)
that rises as income rises.
C)
that is constant as income rises.
D)
that is applied to corporate incomes.
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50)
Incorrect
All are considered benefits of free trade EXCEPT protection of domestic industries.Protectionists favor trade barriers instead of free trade to protect domestic indus 50) All of the following are considered benefits of free trade EXCEPT
A)
quota reduction.
B)
growth of trade.
C)
protective tariff reduction.
D)
protection of domestic industries.
1)
Correct $.25 is the market clearing price or the equilibrium price. At $.25, quantity demandedwas equal to quantity supplied. 1)
On the first day of school, the school store had 100 pencils for sale at $1 each. At the end of the week, there were 90 pencils left. The second w each. At the end of the week, there were 75 pencils left. The store dropped the price $.25 each week, and at the end of the fourth week, there market clearing price?
A)
$.25
B)
$.50
C)
$.75
D)
$1
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2)
Correct
Based on Assistant Secretary Wu's testimony, the U.S. Commerce Department is concerned about rising trade barriers on goods to China. " I have been asked by th where China has caused great concern with U.S. industry in its application of domestic source requirement standards - China's pending software procurement regulation industry to sell software products and services to the Chinese government." 2) United States Combating Use of Standards as Trade Barriers
While U.S. standards concerns are not specific to just China, because American industry has demonstrated a clear interest to compete and part important that there is a standards development process that is open, transparent, participatory, and fair in China. Tensions have arisen... when certain countries take restrictive action that could potentially exclude market access to U.S. businesses. In this reg address a specific example where China has caused great concern with U.S. industry in its application of domestic source requirement standard
regulation which could limit the ability of U.S. industry to sell software products and services to the Chinese government. U.S. software compan industry leaders for their leading-edge innovation, have invested billions of dollars in China to participate directly in China's growing informatio Based on Assistant Secretary Wu's testimony, the U.S. Commerce Department is MOST concerned about
A)
rising trade barriers on goods to China.
B)
rising trade barriers on goods from China.
C)
lowering trade barriers on goods to China.
D)
lowering trade barriers on goods from China.
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3)
Correct
The price of an item is largely determined by the cost of production of that item. Thus, an increase in the cost of raw materials would likely cause the price of that i 3) Which of the following would MOST LIKELY cause an increase in the price of an item?
A)
declining popularity of the item
B)
a decrease in the price of a substitute product
C)
improved technology in the production of that item
D)
an increase in the cost of raw materials for that item
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4)
Correct
Collective bargaining occurs when union and management officials meet to discuss terms of a new contract. Both sides have tools they can use to pressure the oth example, unions can strike. 4) Which situation BEST describes collective bargaining?
A)
Union and management officials meet to discuss terms of a new contract.
B)
Union representatives go on strike to prevent a decrease in benefits.
C)
The company decides to relocate overseas to avoid a wage increase.
D)
Right-to-work laws are passed to prevent the formation of unions.
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5)
Correct
When you choose to do one thing instead of doing another, you've made an opportunity cost. You gave up a number of things to be taking this practice test right n is referred to as the "opportunity cost".
5)
Which type of cost occurs when an individual pays for a piano lesson instead of going to a movie?
A)
fixed cost
B)
marginal cost
C)
residual cost
D)
opportunity cost
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6)
Which statement is a PRIMARY characteristic of a capitalist system?
A)
graduated income tax
B)
private ownership of property
Correct
When production costs are reduced (as when the costs of materials decrease), suppliers are willing to produce more or sell at a lower price. This will cause the equi 6) What should happen to the equilibrium price of whoopee cushions when the price of the rubber necessary to make the cushions declines?
A)
B)
C)
D)
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7)
Correct
In serious labor disputes which arose before 1900, the U.S. government A)
usually supported the owners.
B)
tended to support the organized workers.
The graph shows how many basketballs and how many whoopee cushions can be produced given a limited s graph is called a A)
price graph.
B)
demand curve.
C)
supply curve.
D)
production possibilities graph.
Trade barriers are BEST represented by the quote "You wish to free him from foreign competition" in the paragraph. Such "freedom" would be effected by taxes a 7) Excerpt from A Petition, published in 1845 by Frederic Bastiat
'From the Manufacturers of Candles, Tapers, Lanterns, Candlesticks, Street Lamps,.... To the Honorable Members of the Chamber of Deputies....
You are on the right track. You reject abstract theories and have little regard for abundance and low prices. You concern yourselves mainly with him from foreign competition, that is, to reserve the domestic market for domestic industry...." Which quote BEST represents the idea of trade barriers?
A)
"You are on the right track."
B)
"You reject abstract theories"
C)
"You wish to free him from foreign competition"
D)
"[You] have little regard for abundance and low prices"
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8)
Correct
The author is saying that regulatory measures often have results contrary to the original intention. The third sentence notes that the regulations often result "in u impractical because they are impossible to enforce." 8) Government Attempts to Regulate Technology by Stephen J. Bigelow, Processor Magazine, November 12, 2004
"One of the key roles of government is to form policies and regulate activities that improve the health and welfare of everyday citizens or prote plays such a critical role in our lives, it's no surprise that governments also seek to place controls and regulations on technologies, as well. Most undesired side effects or have proven impractical because they are impossible to enforce...In general, small and medium-sized enterprises are d regulatory compliance." Which of these BEST summarizes the opinion of the author regarding regulatory activities of the government?
A)
Most types of government regulations result in harm to consumers.
B)
Regulatory measures often have results contrary to the original intention.
C)
Small technology enterprises bear less of the costs of regulatory compliance.
D)
Government effectively monitors regulatory compliance of the technology industry.
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9)
Correct The willingness of producers to supply a product determines supply. The definition of supply in economics is the quantity which producers are willing to produce. 9) While demand is based on consumer purchases, supply is MOST LIKELY based on
A)
producers offering a wide range of prices.
B)
consumer confidence in a complementary product.
C)
D)
the willingness to consumers to purchase a product.
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10)
Correct Local governments generally receive their highest amounts of revenue from property taxes. These can be levied on land or on items such as cars and boats. 10) Local governments generally receive their highest amounts of revenue from
A)
federal government grants.
B)
drivers license fees.
C)
property taxes.
D)
excise taxes.
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11)
Correct
When the allocation of goods and services by a free market is not efficient, governments can step in to resolve the market failure. Resolving market failures is belie a market economy by most economists. Not all economists believe governments should step in, or even that market failures occur. 11) When the allocation of goods and services by a free market is not efficient,
A)
market powers can block beneficial gains.
B)
monopolies can work to redistribute market equity.
C)
governments can step in to resolve the market failure.
D)
individuals of the markets can share equitable results.
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12)
Correct
A)
increase.
B)
decrease.
C)
remain stable.
D)
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13)
Correct
When banks lend money they often require collateral, something of value which the bank will receive if the loan is not repaid. Collateral is usually property owned 13) Homer wants to borrow money from the Springfield Bank to buy a new trampoline. The bank requires collateral for a loan. What is collateral?
A)
a signed statement that the loan will be repaid
B)
an increased interest rate for a high risk loan
C)
something of value which the bank will receive if the loan is not repaid
D)
money deposited in the bank which is greater than the amount of the loan
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14)
Incorrect
A price ceiling is a set maximum price at which something can be sold. If this price ceiling is below the equilibrium price then there will be a shortage in the market. 14) Which situation is the MOST LIKELY result of a price ceiling being set below the equilibrium price?
A)
decreased demand
B)
a surplus in the market
C)
a shortage in the market
D)
a higher equilibrium price
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15)
Correct
The lowest recorded teenage labor force participation rates have occurred since 2001. Economists often point to the effects of 9/11, increased low-wage adult wo higher education pays off, so there are less teenage workers in the labor force. 15) Which statement is the MOST ACCURATE description of teenage labor force participation?
A)
More than half of all 16-19 year olds were in the workforce in 1961.
B)
Teenage labor force participation has steadily declined since the recession of 1954.
C)
The lowest recorded teenage labor force participation rates have occurred since 2001.
D)
Since the recession of 1991, the participation of 16-19 year olds has steadily increased.
Personal Finance Economics
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(SSEPF6) Earnings
16)
Correct
The GDP, or Gross Domestic Product, is best defined as the market value of all goods andservices produced in a country. Each country in the world has its own GDP, and measure the general health of nations' economies. 16) Which of these is the BEST definition of GDP?
A)
B)
C)
D)
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17)
Incorrect
In a production possibilities graph the frontier represents production at full efficiency. Ashortage of needed raw materials would reduce efficiency and the line wou 17) In this production possibilities graph, what MIGHT cause the line (frontier) to move to the left?
A)
increased demand for basketballs
B)
a shortage of needed raw materials
C)
an increase in the number of workers
D)
increased efficiency because of new whoopee cushion technology
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18)
Incorrect
An example of debt is when a person pays interest on a mortgage. Debt is a financial obligation to repay a loan, while credit is the amount a borrower may use. Remem for cars in installments, many do pay cash for the entire value of the automobile and do not go into debt in the process. 18) Which of these is the BEST example of debt?
A)
A person pays interest on a mortgage.
B)
C)
D)
A person buys a new car.
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19)
Incorrect
Developing countries refers to those nations that, in older terminology, were once called Third World Economies. There are more of these than there are develo them to become self-sufficient is a major aim of economic development. 19) Countries with a low standard of living, little industrial output, and a low Gross Domestic Product are referred to as
A)
command economies.
B)
developed countries.
C)
developing countries.
D)
plantation economies.
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20)
Correct Embargoes prohibit and limit trade or commerce with a specific country. OPEC's oilembargo on the US in 1973 drove up the price of gasoline. Therefore, a restriction of for goods usually imported from China to rise. 20) Which of these would BEST represent the effect of an embargo on trade with China?
A)
There would be a bear market.
B)
There would be a bull market.
C)
Prices for goods usually imported from China would rise.
D)
Prices for goods usually imported from China would fall.
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21)
Incorrect
Currently, the foreign exchange rate for all world currencies is a floating exchange rate, based on market forces of supply and demand. Now, the foreign exchange 21) Foreign Exchange Market by Business & Economics Research Advisor, from the Library of Congress
In 1971, U.S. dollars were no longer exchanged for gold; and in 1973, the floating exchange rate system that governs the FX market today was p valued by the market forces of supply and demand. Since the abandonment of the gold standard, the FX market has become an important part advent of floating exchange rates, the foreign exchange market has become unregulated. No institution sets rules for trading, and it is not unde organization. When necessary, governments and central banks often work together to restore stability to the FX market. Foreign exchange and Together, they affect the economic situation of people throughout the world. Currently, the foreign exchange rate for all world currencies is
A)
a fixed exchange rate, based on the U.S. dollar.
B)
a floating exchange rate, based on the U.S. dollar.
C)
a fixed exchange rate, based on market forces of supply and demand.
D)
a floating exchange rate, based on market forces of supply and demand.
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22)
Correct
Unlike balance of trade, balance of payments includes foreign investments, along withtourism, and military stationed overseas. Balance of trade simply includes the 22) Unlike balance of trade, balance of payments includes
A)
imports.
B)
exports.
C)
foreign investments.
D)
foreign exchange reserves.
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23)
Correct Stocks have both high risk and high potential return because those two concepts go together in investing. 23) Based on the graph, which of the following statements is TRUE?
A)
B)
C)
D)
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24)
Correct
Money facilitates exchange when individuals purchase goods and services in the product markets. The money flows to businesses who then buy productive resourc 24) Which type of transaction refers to a flow of MONEY through the economy?
A)
Individuals spend money to purchase resources from factor markets.
B)
Money is used to purchase goods and services in the product markets.
C)
Businesses pay for goods purchased in the product markets with money.
D)
Money is used to purchase productive resources in the product markets.
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25)
Correct
Italy has an absolute advantage in wine production because it can produce wine with fewer labor hours than France. A comparative advantage refers to two comp products, but one makes a specific product better than the other. 25)
Suppose that in France 40 labor hours are required to produce a liter of wine. In Italy, 30 labor hours are required to produce a liter of wine. Th
A)
Italy has an absolute advantage in wine production.
B)
France has an absolute advantage in wine production.
C)
Italy has a comparative advantage in wine production.
D)
France has a comparative advantage in wine production.
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26)
Correct This interaction of supply and demand and the effect it has on price is a basic characteristic of a market economy. 26) In a market economy, prices are established by
A)
B)
C)
D)
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27)
Correct
According to the graph, workers with some college have a higher annual income than workers with a high school diploma. Notice the last four lines and you'll see 27) According to the graph,
A)
initially, all workers have relatively the same annual earnings.
B)
workers with some college have a higher annual income than workers with a high school diploma.
C)
workers with a high school diploma have a higher annual income than workers with advanced degrees.
D)
at retirement, workers with a Doctoral degree earn relatively more than workers with a Professional degree.
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28)
Correct
When the amount of output produced by a given amount of inputs increases, the MOST LIKELY result isoverall productivity rises. Other options could take place, bu assuredly. 28) When the amount of output produced by a given amount of inputs increases, the MOST LIKELY result is
A)
overall productivity rises.
B)
economic interdependence rises.
C)
consumer spending on productive resources increases.
D)
business spending on productive resources increases.
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29)
Correct Rebates are a type of promotion designed to boost sales. Many types of businesses offer rebates, for example, the automobile industry. 29)
Carlos wants a new cell phone. If he mails in his proof of purchase to receive money back, what type of promotion designed to boost sales is th
A)
coupon
B)
rebate
C)
bait and switch
D)
direct-mail advertising
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30)
Correct
A)
B)
C)
D)
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31)
Correct
Cuba is mostly a command economy: the government makes nearly all of the economic decisions for the people. Few private businesses are allowed to exist, and ap government employees. 31)
In which country would you MOST expect to find state-controlled industry, the greatest amount of restrictions on private business ownership, a for the government?
A)
Brazil
B)
Canada
C)
Cuba
D)
Mexico
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32)
Incorrect
Tax rates in which the percentage of tax is the same regardless of the level of income is MOST LIKELY a proportional tax. Another term for this type of tax is a "flat t advanced economies. Progressive and regressive taxes are almost always used there. 32) Tax rates in which the percentage of tax is the same regardless of the level of income is MOST LIKELY a
A)
regressive tax.
B)
progressive tax.
C)
value-added tax.
D)
proportional tax.
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33)
Correct
Of these examples, a doctor in private practice would be the least affected by inflation. Inflation generally hurts most those on fixed incomes or those which costs t remain more constant than either examples involving business owners. 33) Which occupation would be LEAST affected by inflation?
A)
a doctor in private practice
B)
an owner of a shipping company
C)
an owner of a small hardware store
D)
a retired teacher living on his pension
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34)
Correct
As the value of the U.S. dollar has increased relative to the peso, the buying power of the U.S. dollar has increased in Mexico. Therefore, U.S. consumers of Mexican 34) Over the course of a year, the Mexican peso has depreciated relative to the U.S. dollar. Who would MOST benefit from this occurrence?
A)
B)
C)
D)
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35)
Correct In economics, capital includes the buildings and equipment needed to produce goods andservices. Therefore, buying new equipmentis an example of capital. 35) Which of these BEST represents capital investment for a company?
A)
advertising
B)
renting space
C)
D)
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36)
Correct
Based on the discussion of high trade costs, the presence of numerous tariffs, and problems with customs procedures and duties it is clear that the author feels that challenge facing Africa's international trade success. 36) Trade Costs in Africa
World Bank Document, September 2008
High trade costsfor transporting goods and getting them across bordershave a negative impact on prospects for expanding African trade, m
While reducing tariffs and other trade barriers remains important, and must continue as part of the liberalization process, many African countr unless trade costs are reduced.
Bottlenecks in the form of regulatory and administrative constraints to transport and transit must also be reduced. Customs procedures, duty d push up the cost of trade. Which statement would MOST LIKELY be claimed by the author of this passage?
A)
That man-made trade barriers are the biggest challenge facing Africa's international trade success.
B)
That agricultural, industrial, and service sector reforms must be made for Africa to trade internationally.
C)
The solution to Africa's international trade problems must be dictated by the United Nations and the World Trade Organization.
D)
Environmental factors such as drought and desertification are the major challenges facing Africa's international trade development.
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37)
Correct
A)
bartering
B)
socialism
C)
free enterprise
D)
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38)
Correct
The MOST LIKELY incentive for entrepreneurs to start a new business is to make a profit. Although they may create a new patent or social benefit, these are not the 38) The MOST LIKELY incentive for entrepreneurs to start a new business is
A)
to make a profit.
B)
C)
D)
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39)
Correct
Fiscal policy is the process by which a government gathers and spends money. An increase in taxes would mean a change in fiscal policy. Unemployment, prices of g connected to fiscal policy, but are not actually policies set by the government. 39) Which action would be a change in the governments fiscal policy?
A)
B)
a decrease in unemployment
C)
a decrease in collected revenues
D)
an increase in the price of goods
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40)
Correct
The law of demand is one of the most famous laws in economics. It states that when theprice of a good rises, the amount demanded falls, and when the price of a g 40)
The law of demand is one of the most famous laws in economics. It states that when the price of a good rises, the amount demanded ________ the amount demanded _____________.
A)
rises, rises
B)
falls, falls
C)
rises, falls
D)
falls, rises
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41)
Correct
Buying new military defense technology is an example of fiscal policy. "Fiscal policy" refers to government policy that attempts to influence the direction of the eco taxes and/or spending. 41) Which of these actions would be an example of fiscal policy?
A)
an increase in the unemployment rate
B)
buying new military defense technology
C)
increasing the money supply of the country
D)
an increase in the value of a company's stock
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42)
Correct
Retailers, restaurants, and many businesses use positive incentives encouraging people to spend money, like coupons and deals. They want people to choose to sp 42) Coupons, "buy-one, get-one free" deals, sales, and discounts are
A)
B)
negative incentives encouraging people to spend money.
C)
positive incentives discouraging people from spending money.
D)
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43)
Correct A short-term monetary policy action would MOST LIKELY lower interest rates. This would be designed to increase public spending and business activity. 43) A short-term monetary policy action would MOST LIKELY
A)
lower federal taxes.
B)
lower interest rates.
C)
raise medicare coverage.
D)
raise unemployment insurance.
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44)
Correct
Pure competition exists when the market is not dominated by any one or group ofbuyers or sellers. There are very few examples of this, but sometimes agricultura vegetables- are good examples of this. 44) Which of these is the best economic definition of "pure competition"?
A)
B)
C)
D)
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45)
Incorrect Rent controls usually result in rents below the equilibrium price. When this happens, there will be a shortage of apartments. 45) Which of these is MOST LIKELY a result of apartment rent controls?
A)
a shortage of apartments
46)
Correct
National defense, protecting emerging industries, protecting domestic jobs, and keepmoney at home are MOST LIKELY arguments in favor of protectionism. The No NAFTA- is an example of an "FTA" and is the opposite of protectionism. 46) National defense, protecting emerging industries, protecting domestic jobs, and keep money at home are MOST LIKELY arguments in favor of
A)
FTA.
B)
NAFTA.
C)
protectionism.
D)
balance of payments.
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47)
A)
"business owner"
B)
"home owner"
C)
"employee"
D)
"student"
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48)
Correct
Whole life insurance has a cash value that can be used in emergencies. Whole life doesn't pay out as much as term life in the event of death, but the cash value incr 48) Which type of insurance has a cash value that can be used in emergencies?
D)
whole life
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49)
Correct Increased income usually increases demand in the marketplace. This means that thedemand curve will shift to the right. 49) Looking at the graph, if there is an increase in income for the households in this market, what is the MOST LIKELY result?
A)
B)
The demand curve will shift to the left.
C)
The demand curve will shift to the right.
D)
The supply curve will become a vertical line.
Microeconomic Concepts
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(SSEMI3) Economic Behavior
50)
. 50) Which relationship BEST illustrates a comparison of absolute advantage and comparative advantage?
D)
A country with a comparative advantage can produce a product at a lower opportunity cost, even if another country has an absolute advantage in the production of all goods.
1)
Hide
Correct The factors of production are land, labor, capital, and entrepreneurship. Capital is defined as the equipment and factories needed to produce goods. 1) As one of the factors of production, capital is defined as
A)
the goods and services a business produces.
B)
the supply of labor needed to produce goods.
C)
the people that purchase goods and services.
D)
the equipment and factories needed to produce goods.
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2)
Hide
Correct
The introduction of new technology often increases efficiency and reduces productioncosts. This increases profits and thus motivates producers to increase supply. 2) Which factor might cause an increase in the supply of a product?
A)
a decrease in productivity
B)
fewer sellers in the marketplace
C)
the introduction of new technology
D)
an increase in the cost of raw materials
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3)
Hide
Correct Term, whole, and variable categories refer to life insurance. 3) Which type of insurance is MOST LIKELY classified into categories such as term, whole, and variable?
A)
life insurance
B)
health insurance
C)
automobile insurance
D)
disability insurance
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4)
Hide
Correct
By showing what businesses and households bring to and take from the product andfactor markets the chart shows how households and businesses interact in a m 4) The diagram shows the circular flow of goods and resources. What is the primary purpose of this chart?
A)
It shows the relationship between supply and demand.
B)
It indicates the changing tastes in the product market.
C)
It shows how households and businesses interact in a market economy.
D)
It shows the need for government intervention in any economic system.
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5)
Hide
Correct Low GDP, high interest rates and inflation devalue the currency of non-industrialized countries.
5)
Foreign Exchange Market by Business & Economics Research Advisor, from the Library of Congress
The characteristics of the FX market that make it so unique are: the volume of trading, liquidity of the market, geographical dispersion, the 24 h the number and variety of market traders, and the factors that affect the exchange rate. This market has a number of marketplaces where curr avoid exploitation by arbitragers, difference in rates are usually kept at a minimum. Banks all over the world are involved in foreign exchange tr located in Tokyo, London and New York, allowing the market to remain open 24 hours a day; when Asian trading is ending, European trading is session. Traders do not have to wait for the market to open. Monetary flows and economic changes such as GDP growth, interest rates, inflatio surpluses, cause fluctuations in the exchange rate. Because news affecting foreign exchange is well publicized, insider information is almost non How might non-industrialized countries be impacted by the foreign exchange market?
A)
Non-industrialized countries are exploited by arbitragers.
B)
The 24-hour trading day impacts non-industrialized countries who lack infrastructure.
C)
The low supply of the three major hard currencies negatively impact nonindustrialized countries.
D)
Low GDP, high interest rates and inflation devalue the currency of non-industrialized countries.
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6)
Hide
Incorrect The Constitution prevents the government from creating an export tax. This would discourage international trade and hurt the country's domestic economy. 6) What tax does the United States Constitution prohibit the national government from levying on its citizens?
A)
sales tax
B)
export tax
C)
income tax
D)
luxury tax
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7)
Hide
Correct
When the supply curve moved to the left, a decreased supply was indicated. A decreased supply would probably cause a rise in price. Thus, the equilibrium price w 7) In the graph, what happened to the equilibrium price when the supply curve moved from S1 to S2?
A)
It did not change.
B)
The equilibrium price went up.
C)
The equilibrium price went down.
D)
It indicated a decrease in demand.
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8)
Hide
Correct
A)
fiscal policy.
B)
monetary policy.
C)
the exchange rate.
D)
the discount rate.
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9)
Hide
Correct
Of these examples, a doctor in private practice would be the least affected by inflation. Inflation generally hurts most those on fixed incomes or those which costs t remain more constant than either examples involving business owners. 9) Which occupation would be LEAST affected by inflation?
A)
a doctor in private practice
B)
an owner of a shipping company
C)
an owner of a small hardware store
D)
a retired teacher living on his pension
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10)
Hide
Correct
One way the U.S. Constitution protects free enterprise is by giving Congress the authorityto grant patents and copyrights. Part of Article I, Section 8 states that Congres Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries...." Innovation original works and inventions to be the sole producers or publishers of their works for a specified time, allowing the authors and inventors to potentially obtain economi 10) Which of these is an example of how the U.S. Constitution protects the free enterprise system?
A)
Congress is given the power to borrow money.
B)
Congress is given the authority to collect taxes.
C)
Congress is given the authority to raise and support armies.
D)
Congress is given the authority to grant patents and copyrights.
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11)
Hide
Correct
A government that operates a market economy MIGHT become involved in the economyto provide public goods and services to its citizens. In a market economy, individuals answer the basic economic questions. 11) A government that operates a market economy MIGHT become involved in the economy
A)
to increase the profits of a specific company.
B)
to eliminate income inequality among its citizens.
C)
to make sure all products are produced the same way.
D)
to provide public goods and services to its citizens.
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12)
Hide
Correct
A)
land and surgeon
B)
capital and oil rig
C)
D)
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13)
Hide
Correct
Though the government does impose certain taxes, individuals can keep the gains they earn. An individual's private property, such as land or capital, can generally be u earning money for using that property is theincentive for individuals to work, save, and invest. This is known as "profit motive." 13) How do private property rights encourage individuals to work, save, and invest?
A)
Individuals can keep the gains they earn.
B)
Most investments are guaranteed by the government.
C)
Most earnings of individuals will go to the government.
D)
Any earnings or wealth cannot be passed on through inheritance.
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14)
Hide
Incorrect
Buying new military defense technology is an example of fiscal policy. "Fiscal policy" refers to government policy that attempts to influence the direction of the eco taxes and/or spending. 14) Which of these actions would be an example of fiscal policy?
A)
an increase in the unemployment rate
B)
buying new military defense technology
C)
increasing the money supply of the country
D)
an increase in the value of a company's stock
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15)
Hide
Correct
In trying to keep the marginal costs below the marginal benefits, Lee should keep the number of workers at nine. Adding additional workers increases the marginal 15) Lee's company of nine workers produces 150 units of a product with a marginal cost of $10 for the last unit. The product sells for $12 per unit. marginal cost would be $13. In this case, Lee should
A)
keep the number of workers at nine.
B)
increase the number of workers to ten.
C)
decrease the number of workers to eight.
D)
increase the marginal cost per unit to $12.
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16)
Hide
Incorrect
While the balance of trade is the difference between the monetary value of exports andimports, the balance of payments counts goods, services, and financial tran payments is the sum of all money (not just "currency") going out of a country subtracted from all of the money coming into a country in the same period of time. 16) While the balance of trade is the difference between the monetary value of exports and imports, the balance of payments
A)
counts only goods.
B)
counts only services.
C)
counts goods and the financial transactions between countries.
D)
counts goods, services, and financial transactions between countries.
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17)
Hide
Correct Capital, one of the factors of production, includes the equipment used in the production ofgoods. 17)
Mr. Green is opening a new bakery. He has purchased an industrial oven which can accommodate twenty loaves of bread at a time. This oven r
A)
capital
B)
entrepreneurship
C)
labor
D)
land
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18)
Hide
Incorrect
Taxes being levied on U.S. citizens by both the federal and state governments is an example of a concurrent power. A concurrent power is a governmental power th governments. 18) Taxes may be levied on U.S. citizens by both the federal and state governments. This is an example of
A)
double jeopardy.
B)
a reserved power.
C)
an exclusive power.
D)
a concurrent power.
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19)
Hide
Correct
Software companies are looking to the manpower of foreign countries to drive this growing industry. This use of human resources stimulates the economy in count greatly needed. 19) Software Economy (2007 to 2011) Global Information Technology (IT) employment will rise by 7.1 million jobs More than 100,000 new businesses will emerge as a result of the growing IT field IT business will be responsible for over 25% of the new jobs throughout the world
Use the chart to answer the question. What type of resource does the data in the chart represent?
A)
capital
B)
financial
C)
human
D)
natural
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20)
Hide
Correct
The price of an item is largely determined by the cost of production of that item. Thus, an increase in the cost of raw materials would likely cause the price of that i 20) Which of the following would MOST LIKELY cause an increase in the price of an item?
A)
B)
C)
D)
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21)
Hide
Incorrect
In order to maximize trade according to the principles of comparative advantage,country Y should produce food and import clothes from country X. The economic explains how trade is beneficial for all parties involved as long as they produce goods with different relative costs. 21)
Country X can produce 1,000 units of food and 2,000 units of clothes. Country Y can produce 1,000 units of food and 1,000 units of clothes. In o principles of comparative advantage,
A)
country X should produce food and import clothes from country Y.
B)
country Y should produce food and import clothes from country X.
C)
country X and Y should produce both food and clothes to meet their own needs.
D)
country Y should produce both food and clothes, and import additional clothes from country X.
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22)
Hide
Correct
When an individual specializes to produce one good, and then acquires other desiredgoods from other specialists, both parties gain as a result of voluntary exchan exchange is non-fraudulent. 22) When an individual specializes to produce one good, and then acquires additional desired goods from other specialists,
A)
both parties gain as a result of voluntary exchange.
B)
both parties gain as a result of fraudulent exchange.
C)
neither party gains as specialization decreases efficiency.
D)
neither party gains as specialization decreases productivity.
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23)
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Correct
For businesses and entrepreneurs, net profit is generally considered to be the BEST measure of success. Businesses considered "successful" tend to earn more incom service or good. This is called "net profit." 23) For businesses and entrepreneurs, which of these is generally considered to be the BEST measure of success?
A)
net profit
B)
total revenue
C)
marginal cash
D)
marginal revenue
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24)
Hide
Correct
Bartering is an economic concept of exchanging goods or services for other goods or services. In this case, Lil' Cheez is exchanging his songwriting skills for Mizz T's perfo 24)
Rapper Lil' Cheez offers to write a hip hop song for singer Mizz T in exchange for Mizz T appearing in his next music video and on his next album
A)
sales.
B)
bartering.
C)
specialization.
D)
supply and demand.
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25)
Hide
A)
10.3 pesos.
B)
103 pesos.
C)
900 pesos.
D)
1034 pesos.
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26)
Hide
Correct Entrepreneurship is defined as the ability and risk-taking involved in starting a new business. Mr. Simpson is the entrepreneur in this undertaking.
26)
Mr. Simpson has decided to start a new company to produce bobble-head dolls. He has hired a contractor to build his factory and a manager to PRIMARILY represents which factor of production?
A)
capital
B)
entrepreneurship
C)
labor
D)
land
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27)
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Correct
In the circular flow model, households earn income from the factor market and businesses earn revenue from the product market. Additionally, households spendmon can supply product markets with goods andservices. 27) Which statement about the circular flow model is CORRECT?
A)
Businesses earn income from both the factor and product markets.
B)
Households earn income from both the factor and product markets.
C)
Households earn income from the product market, and businesses earn revenue from the factor market.
D)
Households earn income from the factor market and businesses earn revenue from the product market.
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28)
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Correct
The graph would be used by someone who supports the North American Free TradeAgreement (NAFTA). NAFTA went into effect in 1994, and, according to the info increased somewhat steadily since that time. THe agreement eliminates tariffs on goods traded between the U.S., Mexico, and Canada. 28) This graph would MOST LIKELY be used by one who
A)
B)
C)
D)
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29)
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Correct Fixed expenses are those items in a budget which are consistent from month to month. In this list, only the expenses for a birthday do not fit this category. 29) Which of the following is NOT an example of a fixed expense in a budget?
A)
car payment
B)
mortgage payment
C)
car insurance payment
D)
expenses for a birthday party
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30)
Hide
Correct
Personal health history is not reflected in credit worthiness. There are many other factors that determine credit worthiness other than the ones listed... like annua credit history. 30) Which of these is LEAST LIKELY to determine credit worthiness?
A)
payment history
B)
length of employment
C)
personal health history
D)
personal educational background
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31)
Hide
Correct
A)
increase.
B)
decrease.
C)
remain stable.
D)
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32)
Hide
Correct
A)
surgeon
B)
engineer
C)
lifeguard
D)
house cleaner
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33)
Hide
Correct
A)
free trade.
B)
trade barriers.
C)
trade incentives.
D)
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34)
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Correct Insurance companies consider all of the factors EXCEPT your ethnicity when determininginsurance costs. This is explicitly forbidden by federal law. 34)
You are purchasing your first vehicle. The insurance company informs you that all of these factors will be considered when determining the cos
A)
B)
your ethnicity.
C)
your gender.
D)
your age.
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35)
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Incorrect
As developing nations are taught to industrialize and make use of capital resources, new challenges to the supply of the worlds natural resources will no doubt app increase as developing countries begin to use natural resourcesin similar fashions as industrialized countries. Industrial nations have historically used the productive re the world. However, once non-industrial nations become more industrialized and begin to make more goods, those productive resources will become even more scarce 35)
As developing nations industrialize and make use of capital resources, new challenges to the supply of the worlds natural resources will no dou
A)
the rate of depletion will increase as developing countries begin to use more natural resources.
B)
more developed countries do not want developing countries to become more economically independent.
C)
the developing countries will learn to bargain with their natural resources and impact the economies of other nations.
D)
the countries that rely on the trade of certain natural resources will resent the potential competition from other countries.
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36)
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Correct
A)
B)
C)
D)
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37)
Hide
Incorrect Perfect competition is characterized by a large number of suppliers who have open access to the market. 37) Which market structure has the largest number of suppliers?
A)
monopoly
B)
oligopoly
C)
perfect competition
D)
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38)
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Correct
When consumers prefer a specific brand-- even when others are available at a lower price-- because of its different kind of features, it is an example of monopolisti category, which consists of a number of companies that offer similar types of products. 38)
Many companies sell different types of cell phones. Some consumers prefer to use a specific brand because of its different kind of features. Thi
A)
monopoly.
B)
oligopoly.
C)
pure competition.
D)
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39)
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Correct
The job that would MOST LIKELY require strong written communication skills is asecretary. Secretaries (or "administrative assistants") have to take down messages, written format much more than the other occupations listed. 39) The job that would MOST LIKELY require strong written communication skills is
A)
a mechanic.
B)
a secretary.
C)
a bank teller.
D)
a retail clerk.
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40)
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Correct
A)
B)
C)
D)
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41)
Hide
Correct County governments assess, levy, and collect ad valorem taxes. Counties have varying levels of wealth, so some ad valorem taxes are higher than others. 41)
Ad valorem taxes are property taxes that are levied on property such as automobiles, land, and houses, and, in Georgia, fall under the jurisdicti
A)
the state.
B)
the Legislature.
C)
county governments.
D)
special authorities.
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42)
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Incorrect One factor causing fluctuation in the exchange rate is interest rates. According to the document, other factors include GDP growth, inflation and trade deficits. 42) Foreign Exchange Market by Business & Economics Research Advisor, from the Library of Congress
The characteristics of the FX market that make it so unique are: the volume of trading, liquidity of the market, geographical dispersion, the 24 h the number and variety of market traders, and the factors that affect the exchange rate. This market has a number of marketplaces where curr avoid exploitation by arbitragers, difference in rates are usually kept at a minimum. Banks all over the world are involved in foreign exchange tr located in Tokyo, London and New York, allowing the market to remain open 24 hours a day; when Asian trading is ending, European trading is session. Traders do not have to wait for the market to open. Monetary flows and economic changes such as GDP growth, interest rates, inflatio surpluses, cause fluctuations in the exchange rate. Because news affecting foreign exchange is well publicized, insider information is almost non One factor causing fluctuation in the exchange rate is
A)
interest rates.
B)
lack of weekend trading hours.
C)
insider information by arbitragers.
D)
geographical dispersion of the FX market.
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43)
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Correct
In a free-enterprise economy, the LEAST LIKELY effect of economic growth should be an increase in poverty levels. Economic growth should be associated with decreasin 43) In a free-enterprise economy, the LEAST LIKELY effect of economic growth would be
A)
new employment opportunities.
B)
an increase in poverty levels.
C)
higher investment in real capital.
D)
an increase in standards of living.
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44)
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Correct
In a market economy, a high price is a signal for producers to supply more andconsumers to buy less. If a price is set TOO high, though, then consumers will buy les 44) In a market economy, a high price is a signal for
A)
B)
C)
D)
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45)
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Incorrect
In following the "laissez faire" business philosophy, it stands to reason that the U.S. government had little or no influence on business and industry. This resulted in but not a good amount of prosperity for the people working in those industries. 45) What impact did U.S. governmental polices have on business and industry during the late 1800s?
A)
The U.S. government regulated industry for the public good.
B)
The U.S. government had little or no influence on business and industry.
C)
The U.S. government tried to limit and regulate industrial and business growth.
D)
The U.S. government tried to control public and private utilities and transportation.
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46)
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Correct
An insurance policy with a higher premium MOST LIKELY has a lower deductible. The premium is the cost of the insurance, while the deductible is the amount of th insurance company pays. 46) An insurance policy with a higher premium MOST LIKELY has
A)
a lower deductible.
B)
no liability limit.
C)
D)
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47)
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Correct
The Association of Southeast Asian Nations, or ASEAN, is one of the largest regionalmarkets in the world with 10 member nations. According to the group itself, the accelerate economic growth, social progress and cultural development in the region, and to promote regional peace and stability." 47) Established in 1967 in Thailand with more than 500 million members, one of the largest regional markets in the world is
A)
ASEAN.
B)
NAFTA.
C)
NATO.
D)
OPEC.
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48)
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Correct
The European Union, ASEAN, and NAFTA, or I, II, and IV only, are all supported by free traders. OPEC (the Organization of Petroleum Exporting Countries) controls t practicing free trade. 48) I. the European Union II. ASEAN III. OPEC IV. NAFTA People who support free trade would MOST LIKELY back which of these organizations?
A)
I and IV only
B)
II and IV only
C)
I, II, and IV only
D)
II, III, and IV only
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49)
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Correct
The Volkswagen Jetta has the advantages of fewer miles and a lower price than the Mini Cooper. The Jetta also has a better safety rating, but that was not in any o 49)
You want to buy a car, and you have researched the options in the table. What advantages do you see for buying the Volkswagen Jetta over the
A)
newer year and fewer miles
B)
fewer miles and lower price
C)
newer year and better safety
D)
higher price and better reviews
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50)
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Correct
Your BEST choice is to put money into a savings account at a financial institution. If you really want the video game system, saving is the best option. Using credit is costing much more than the listed price when you figure in the interest you'll be charged on the credit card. 50) A new video game system is coming out in a month and you would like to have enough money to purchase it. Your BEST financial choice is to
A)
research investment options such as stocks and bonds.
B)
put money into a savings account at a financial institution.
C)
spend more money now and buy the video game system with a credit card.
D)
ask the electronics store if they will loan you the money for the video game system.
1)
Hide
Correct Term, whole, and variable categories refer to life insurance. 1) Which type of insurance is MOST LIKELY classified into categories such as term, whole, and variable?
A)
life insurance
B)
health insurance
C)
automobile insurance
D)
disability insurance
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2)
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Correct
In these examples, a fast food employee who works 40 hours a week making minimum wage would be impacted most negatively by a regressive tax. A regressive tax- s of a person's income as that income decreases. This is not necessarily the intent of the tax, of course. 2) A regressive tax would NEGATIVELY impact which of these people most?
A)
B)
C)
D)
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3)
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A)
mixed economy.
B)
market economy.
C)
command economy.
D)
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4)
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Correct
The bank would like to earn a profit by charging interest. Interest is the payment a bank receives when it lends someone money. Banks, like other businesses, want to m 4) Which of these is the BEST explanation for why banks loan money to individuals?
A)
The bank would like to earn a profit by charging interest.
B)
The government requires that banks give money to applicants.
C)
The bank would like to take a risk and support an entrepreneur.
D)
The bank would like to borrow money from the Federal Reserve System.
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5)
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Correct
India chose to install a command economy when it first gained independence in 1947. Since that time, the government has loosened control over the economy, and the market system. Today the nation has the world's fourth largest GDP, and ranks as the second fastest growing economy in the world. 5) Which South Asian country is the BEST example of a mixed economy, in which there are elements of both market and command economies?
A)
India
B)
China
C)
Vietnam
D)
North Korea
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6)
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Correct
An entrepreneur is a "business owner", a person who undertakes the responsibility of owning a business. 6) Which of the terms listed below is the BEST synonym for the word "entrepreneur"?
A)
"business owner"
B)
"home owner"
C)
"employee"
D)
"student"
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7)
Hide
Correct Certificates of Deposit would best meet Jan's need because many CDs are less than two years, and provide a higher rate of return than savings accounts.
7)
Jan is risk-averse, but wants to earn the best rate of return in less than two years. Which investment would MOST LIKELY meet Jan's need?
A)
Bonds
B)
Stocks
C)
Certificates of Deposit
D)
Stock-Based Mutual Funds
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8)
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Correct
The best definition of a budget is a plan for raising, maintaining, and spending money. Every year, each state and local government drafts a new plan for how they will m their citizens. 8) Which is the BEST definition of budget?
A)
a system for designing, creating, and distributing money
B)
a plan for raising, maintaining, and spending money
C)
the money a government collects from citizens
D)
the bills that a government must pay
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9)
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Correct
The profit motive is a characteristic of a free enterprise system. Thus, the desire to earn a profit motivates individuals to start a business and to make their product 9) In a free enterprise system, what motivates individuals to start a business?
A)
the risk of failure
B)
the need for job security
C)
the desire to earn a profit
D)
the desire to make economic decisions
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10)
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Correct Due to the increased buying power of foreign currencies, one benefit of a weak dollar isincreased surplus grain sales. 10) A Weak Dollar by The Columbus Dispatch, September 7, 1999
The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen...It also has lost ground to the According to the passage, one benefit of a weak dollar might be
A)
increased car sales.
B)
decreased car sales.
C)
increased surplus grain sales.
D)
decreased surplus grain sales.
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11)
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Correct Wages would decline as the competition for jobs increases. Workers and their wages follow the same laws of supply and demand as other products in the market. 11)
If the supply of computer engineers increases at the same time that the demand for these workers decreases, what would be the MOST LIKELY
A)
B)
C)
D)
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12)
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Correct
When a demand curve moves to the right, as in this case, demand has increased. This might happen when there is a decrease in the price of a complementary prod
12)
In the graph, what might explain the movement of the demand curve from D1 to D3?
A)
B)
C)
D)
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13)
Hide
Correct
A)
fiscal policy.
B)
monetary policy.
C)
the exchange rate.
D)
the discount rate.
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14)
Hide
Correct
A)
bartering
B)
socialism
C)
free enterprise
D)
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15)
Hide
Correct
In a command economy, the govenment controls every aspect of the nation's economy. Decisions about what will be produced, who will produce it, and how it will government. There are very few command economies still in existence today, though Saudi Arabia is one. 15)
In this type of economic system, the government controls all aspects of the economy and makes all decisions about what goods will be produce will be produced.
A)
command
B)
market
C)
mixed
D)
traditional
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16)
Hide
Correct
Increased income usually increases demand in the marketplace. This means that thedemand curve will shift to the right. 16)
Looking at the graph, if there is an increase in income for the households in this market, what is the MOST LIKELY result?
A)
B)
The demand curve will shift to the left.
C)
The demand curve will shift to the right.
D)
The supply curve will become a vertical line.
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17)
Hide
Correct
A)
surgeon
B)
engineer
C)
lifeguard
D)
house cleaner
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18)
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Correct According to the law of demand, as price increases, the quantity demanded decreases and as price decreases, the quantity demanded increases. 18) The statement the quantity demanded of a product varies inversely with its price is a definition of
A)
laissez-faire.
B)
the law of demand.
C)
the invisible hand.
D)
the law of competition.
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19)
Hide
Incorrect As a result of comparative advantage, the output of Product A increases to 60,000 total units. 19)
What happens to the production of Product A as a result of comparative advantage?
A)
The output of Product A decreases to 0 total units.
B)
The output of Product A increases to 60,000 total units.
C)
The output of Product A decreases to 30,000 total units.
D)
The output of Product A increases to 800,000 total units.
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20)
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Correct The Georgia business woman could conclude that her business had made a profit.Income minus costs equals profit. 20)
A Georgia business woman noticed that after she had paid all the costs of conducting her business that year a substantial amount of money rem
A)
Her business had made a profit.
B)
Her business had many capital goods.
C)
Her business had a cash flow problem.
D)
Her business had depreciated in value.
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21)
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Incorrect
Historically, states have received their greatest amount of revenue from general salestax. Some states, though, have eliminated sales taxes on some items, such as groce 21) In the past, states have made their highest amounts of revenue from
A)
alcohol tax.
B)
property tax.
C)
general sales tax.
D)
corporate income tax.
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22)
Hide
Correct
Occupational Health and Safety Administration (OSHA) would investigate the claim of hazardous working conditions. OSHA's primary responsibility is to make sure 22) Which federal regulatory agency would investigate the claim of hazardous working conditions?
A)
Food and Drug Administration (FDA)
B)
Consumer Product Safety Commission (CPSC)
C)
Equal Employment Opportunity Commission (EEOC)
D)
Occupational Health and Safety Administration (OSHA)
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23)
Hide
Correct
The person who would be MOST critical of these statements about the benefits of Free Trade Agreements would be a US factory worker whose job has been outso people listed in the choices would all benefit from the use of Free Trade agreements, and would thus be supportive of them. 23) Free trade increases sales and profits for U.S. businesses, thus strenghtening the economy. Free trade creates U.S. middle-class jobs over the longterm. Free trade is an opportunity for the U.S. to provide financial help to some of the world's poorest countries. Who would be MOST critical of these statements about Free Trade Agreements?
A)
a politician who is reviewing data about increased US profits
B)
a US factory worker whose job has been outsourced to a foreign country
C)
a factory worker in a developing nation who now has a steady source of income
D)
a corporate manager who sees that production costs are dropping and sales remain high
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24)
Hide
Correct Mixed 24) In which kind of economy are prices determined by supply and demand and by government actions?
A)
Command
B)
Market
C)
Mixed
D)
Traditional
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25)
Hide
Incorrect
Corporations are able to sell stock thus raising capital for the company. Stockholders have limited liability. The establishment of price ceilings is not an advantage o the demand was greater than the supply (ashortage). 25) A corporation is LEAST LIKELY to have which advantage?
A)
B)
C)
D)
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26)
Hide
Correct
Whole life insurance has a cash value that can be used in emergencies. Whole life doesn't pay out as much as term life in the event of death, but the cash value incr 26) Which type of insurance has a cash value that can be used in emergencies?
A)
property
B)
term life
C)
disability
D)
whole life
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27)
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Correct
Tariffs are taxes on the import or export of goods from a country. Tariffs are generally "protectionist" in nature, meaning that many are designed to protect certain indu decrease trade between nations. 27) What are tariffs?
A)
political boundaries between nations
B)
military blockades of specific countries
C)
disputes between state governments over boundaries
D)
taxes on the import or export of goods from a country
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28)
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Correct
NAFTA stands for North American Free Trade Agreement and is responsible for the increase in trade between Mexico and the US. The treaty went into effect in 1994 an 28)
According to the chart, what is the reason for the increase in trade between the US and Mexico?
A)
GATT
B)
NAFTA
C)
NATO
D)
WTO
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29)
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Correct
In the graph, the supply curve and the demand curve interesect at the equilibrium price.At the equilibrium price, quantity supplied equals quantity demanded. Th a surplus or a shortage of goods supplied. 29)
Which statement accurately describes the contents of this graph?
A)
B)
C)
D)
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30)
Hide
Correct
In a market economy, the government has very little control over the nation's economy. Decisions about what will be produced, who will produce it, and how it will inidividual citizens and businesses. Supply and demand and the incentive ofprofit drive this type of economy. 30)
In this type of economic system, the production of goods and services is controlled by the concept of supply and demand, businesses are opera government is very minimal.
A)
command
B)
market
C)
mixed
D)
traditional
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31)
Hide
Incorrect
If the country follows a contractionary fiscal policy, it will reduce the size of its budget. Itneeds to spend less money and keep more of it. One way to do this is to red countrys discount rate would result in it having less money, since the discount rate is the interest rate that the government charges on loans it makes to banks. The sam securities relates to the countrys money supply. 31) The leaders of a small country decide that they need to enact a contractionary fiscal policy. Which action is consistent with this fiscal policy?
A)
reduce taxes
B)
lower its discount rate
C)
reduce government spending
D)
lower the price of securities
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32)
Hide
Correct
Supporters of free trade- such as represented by NAFTA- contend that it stimulatedemocratic reform and open markets in areas in need of improvement. In the U in Mexico, but arguments about the merits of free tradeare usually accompanied by political partisanship.
32)
Supporters of NAFTA and free trade would contend that such agreements
A)
increase government control of a nation's economy.
B)
limit the growth of an economy and prevents inflation.
C)
stimulate democratic reform and open markets in areas in need of improvement.
D)
bring an increase in economic control of the most powerful people in a country.
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33)
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Correct
Comparative advantage, or the ability to produce a product at a lower opportunity cost, results in specialization and trade increases. International tariffs would mo wide productivity since there would be barriers to trade between countries. 33) Which of these international trade concepts results in specialization and trade increases in total world output?
A)
absolute advantage
B)
balance of payments
C)
comparative advantage
D)
international tariffs
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34)
Hide
Incorrect
When a government funds programs at levels greater than the revenue it is receiving, the budget includes deficit spending. Income tax rates do not automatically increa government is funding programs assumes that the budget has already been passed. 34) When a government funds programs at levels greater than the revenue it is receiving,
A)
the national debt decreases.
B)
the income tax rates increase.
C)
the budget includes deficit spending.
D)
congress must submit a new budget for review.
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35)
Hide
Correct All of the points represent possible product output EXCEPTpoint D. A company cannot produce a combination of X and Y that lies outside of the curve.
35)
A company produces two products, X and Y. All of the points represent possible product output EXCEPT
A)
point A.
B)
point B.
C)
point C.
D)
point D.
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36)
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Correct A tax on retail products based on a set percentage of retail sale is a sales tax. The states set the amount of this tax for their state-- and only 5 states don't have this New Hampshire, and Oregon) 36) A tax on retail products based on a set percentage retail cost is called
A)
sales tax.
B)
retail tax.
C)
income tax.
D)
corporation tax.
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37)
Hide
Correct
Apac would benefit from stimulation of capital resources. Modern machinery could greatly increase their production, yielding more produce to sell. Additionally, be farmers to reach markets farther away. 37)
Over 80% of the people living in the Apac District in Uganda are farmers. However, profits are minimal due to the high costs of farming with po Apac would benefit from a stimulation of which type of resource?
A)
capital
B)
human
C)
marketing
D)
natural
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38)
Hide
Correct Though all of the choices represent different types of revenue sources, personal incomeis a tax source. 38) Taxes are a form of government revenue. Which of these is a tax source?
A)
federal grant
B)
state lottery
C)
personal income
D)
public charities
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39)
Hide
Correct Inflation reduces the value of money. Creditors will be paid back with money that is worth less than the money they loaned at the fixed rate. 39) Inflation is most harmful to
A)
debtors.
B)
creditors.
C)
wage earners.
D)
property owners.
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40)
Hide
Correct
Canada, Mexico, and Japan are the largest trading partners of the United States. The respective order is MOST LIKELY due to NAFTA, or the North American Free Tra or elimination of barriers to trade between the United States, Canada, and Mexico.True, Japan is in Asia, but the the other two countries listed in the question ARE in NA 40) In 2002, Canada, Mexico, and Japan were the largest trading partners of the United States. The respective order is MOST LIKELY due to
A)
ASEAN.
B)
EU.
C)
NAFTA.
D)
OPEC.
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41)
Hide
Correct Although age at purchase date may be a factor, it is not listed on the chart, and is therefore the answer. 41) Forms of Payment
Reason for buying
Pays out When
Accumulates Money Deferred?
Term Life Insurance Whole Life Insurance Deferred Annuities Immediate Annuities
Provide income for dependents
A person dies
Single Sum
No
A person dies, or borrows the cash value of the policy
Single Sum
Yes
To accummulate money in a taxdeferred product To assure people don't "outlive income"
A person makes withdrawls
Single Sum
Yes
One period after purchase, stops at death
Lifetime Income
Yes, but only in the e payout years
A)
pay out options.
B)
purpose for buying.
C)
D)
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42)
Hide
Correct Capitalist economic systems are characterized by competition, private ownership of property, and limited government interference in the marketplace. 42) Which statement is a PRIMARY characteristic of a capitalist system?
A)
graduated income tax
B)
private ownership of property
C)
equal distribution of resources
D)
governmental regulation of business
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43)
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Correct
The federal personal income tax is an example of a progressive tax. A progressive taxmeans the rate of tax rises as income rises (up to a certain point). 43) The federal personal income tax is an example of what kind of tax?
A)
regressive tax
B)
progressive tax
C)
value-added tax
D)
proportional tax
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44)
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Correct
The author is saying that regulatory measures often have results contrary to the original intention. The third sentence notes that the regulations often result "in u impractical because they are impossible to enforce." 44) Government Attempts to Regulate Technology by Stephen J. Bigelow, Processor Magazine, November 12, 2004
"One of the key roles of government is to form policies and regulate activities that improve the health and welfare of everyday citizens or prote plays such a critical role in our lives, it's no surprise that governments also seek to place controls and regulations on technologies, as well. Most undesired side effects or have proven impractical because they are impossible to enforce...In general, small and medium-sized enterprises are d regulatory compliance." Which of these BEST summarizes the opinion of the author regarding regulatory activities of the government?
A)
Most types of government regulations result in harm to consumers.
B)
Regulatory measures often have results contrary to the original intention.
C)
Small technology enterprises bear less of the costs of regulatory compliance.
D)
Government effectively monitors regulatory compliance of the technology industry.
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45)
Hide
Correct
In a capitalist economy, the consumer is king since consumers determine what products will be produced. In other words, the choices exhibited by consumers thro purchase a product results, eventually, in certaingoods being produced more often or some goods whose production is ended. This concept is referred to as consumer so 45) Why is the consumer considered "king" in a capitalist economy?
A)
B)
C)
D)
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46)
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Correct
A)
B)
C)
D)
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47)
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Correct
Pure competition exists when the market is not dominated by any one or group ofbuyers or sellers. There are very few examples of this, but sometimes agricultura vegetables- are good examples of this. 47) Which of these is the best economic definition of "pure competition"?
A)
B)
C)
D)
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48)
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Correct
A)
B)
C)
D)
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49)
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Correct
If you note that the lines represent education and the vertical axis represents income, then the answer is clear: Investment in education can lead to higher annual 49)
What generalization about educational attainment and annual earnings can be made according to the graph?
A)
B)
C)
D)
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50)
Hide
Incorrect Since the 1970s, scientists and environmentalists have warned consumers that supplies ofmetals and fossil fuels are being depleted. 50)
Nations, governments, corporations, and individuals are reassessing their use of two natural resources that are expected to one day be deplete
A)
trees.
B)
stone.
C)
metals.
D)
water.
1)
Hide
Correct
In a capitalist economy, the consumer is king since consumers determine what products will be produced. In other words, the choices exhibited by consumers thro purchase a product results, eventually, in certaingoods being produced more often or some goods whose production is ended. This concept is referred to as consumer so 1) Why is the consumer considered "king" in a capitalist economy?
A)
B)
C)
D)
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2)
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Incorrect
One way that the free enterprise system of the United States promotes individual initiativeis that authors can have their original works copyrighted. A copyright is the e adapt a particular work for a certain period of time. This allows the creator of the work to potentially profit from his or her creation. 2) Which of these is the BEST example of how the free enterprise system of the United States promotes individual initiative?
A)
Men must register for selective service.
B)
A citizen may be called to serve on a jury.
C)
The legislative branch levies an income tax.
D)
Authors can have original works copyrighted.
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3)
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Incorrect
If the federal government attains a balanced budget, the federal debt will not change.Although government spending is balanced and not adding to the debt, the d a surplus.
3)
The federal debt is the total amount borrowed from investors to finance government spending. In 1940, it was $50.7 billion. If the federal gove
A)
the federal debt will decrease.
B)
the federal debt will not change.
C)
the federal government runs a deficit.
D)
the federal government runs a surplus.
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4)
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Correct The Consumer Price Index shows the increase (or decrease) of prices for goods andservices. It therefore is used to determine the rate of inflation. 4) The Consumer Price Index (CPI) is best used to determine
A)
the Dow Jones Index.
B)
the rate of inflation.
C)
the unemployment rate.
D)
currency exchange rates.
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5)
Hide
Correct Because banks are profit-making institutions, the interest charged by banks on loans must be more than the interest earned by customers. The difference is called 5) Why is there a difference between interest charged and interest earned?
A)
B)
C)
D)
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6)
Hide
Correct
GDP is often considered the most important statistic in valuing the health of a country's economy. Since the GDP measures the value of all final goods produced in a cou buying imported goods would result in a decrease in the GDP. 6) An increase in Americans buying imported goods would result in
A)
no change in the GDP.
B)
a decrease in the GDP.
C)
an increase in the GDP.
D)
a severely damaged GDP.
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7)
Hide
Correct
The market clearing price is most closely associated with the equilibrium price. This means that there is neither a shortage nor a surplus of goods at a specific price. 7) The "market clearing price" is most closely associated with
A)
the price index.
B)
the price level.
C)
the price ceiling.
D)
the equilibrium price.
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8)
Hide
Incorrect
To compensate for greater risk, investors require higher returns for some investments. This is desire to be compensated more for greater risks is pretty common in 8)
Why do investors require higher returns for some investments?
A)
to compensate for less risk
B)
to compensate for greater risk
C)
to invest less funds for less risk
D)
to offset the amount of money invested
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9)
Hide
Correct When supply and demand curves are drawn on the same graph equilibrium price can be determined. This is the price agreed upon by producers and consumers. 9)
In the graph, what information is determined by looking at the intersection of the supply and demand curves?
A)
the realative efficiency of production
B)
amount supplied at a specific price
C)
increase in demand
D)
equilibrium price
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10)
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Correct
One difference between a manager and an entrepreneur is that an entrepreneur is willing to take a financial risk. A manager would work for the entrepreneur and could wages. Entrepreneurs, though, invest their own money into the business, meaning their livelihood is based on the success of the undertaking. 10) One difference between a manager and an entrepreneur is that an entrepreneur is willing to
A)
take a financial risk.
B)
lead rather than follow.
C)
be cautious and methodical.
D)
manage a large group of people.
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11)
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Incorrect
Though it did not start out with this name, The European Union was created in the aftermath of World War II. It is now an organization designed to make trade betw 11)
This map shows the organization that was started out as six countries after World War II but has grown into an economic association of nearly organization?
A)
NATO
B)
SEATO
C)
the European Union
D)
the United Nations
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12)
Hide
Correct Credit refers to any time that a transaction takes place and one party does not reimburse the other immediately. 12) Any time that a person defers payment, they are using
A)
debt.
B)
trade.
C)
credit.
D)
bartering.
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13)
Hide
Incorrect Countries around the world specialize production, and trade with other countries based upon the comparative advantage in production. 13) Countries around the world specialize production, and trade with other countries based upon
A)
B)
C)
D)
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14)
Hide
Correct The Yen is the monetary unit for Japan. It was introduced during the Meiji Period in the late 1800s. 14)
Although it lost most of its value during and after World War II, the currency of Japan is now one of the strongest in the world. Japan's currency
A)
Riel.
B)
Ruble.
C)
Won.
D)
Yen.
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15)
Hide
Correct
While all could conceivably affect a products price, how that product looks is likely to affect it least. If, however, the looks are related to a scarce resource (if it is co
cause a higher price, but that would be more directly related to the factors of production issue. 15) Which of the following would have the LEAST impact on the price of a product?
A)
how the product looks
B)
demand for that product
C)
cost of the factors of production
D)
the cost of delivering that product
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16)
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Incorrect
"China's pending software procurement regulation" is a specific example of a tradebarrier. The word "regulation" implies that China will attempt to limit or contro into the country. 16) On May 13, 2005, Benjamin Wu, the Department of Commerce's assistant secretary for technology policy delivered this testimony to the House Government Reform.
(excerpt) "Mr. Chairman and members of the Committee, thank you for the opportunity to address your concerns on the use of domestic source restricti
The Department of Commerce is committed to ensuring that standards are fair and responsive to market and technology needs, and that we pa trade barriers to American goods and services.
While U.S. standards concerns are not specific to just China, because American industry has demonstrated a clear interest to compete and part important that there is a standards development process that is open, transparent, participatory, and fair in China. In 2004, China was the Unit total merchandise trade between the two nations reaching $231 billion. The United States exported over $35 billion of merchandise to China, a previous year.
Tensions have arisen, however, when certain countries take restrictive action that could potentially exclude market access to U.S. businesses. In Committee to address a specific example where China has caused great concern with U.S. industry in its application of domestic source require procurement regulation which could limit the ability of U.S. industry to sell software products and services to the Chinese government. U.S. sof recognized as industry leaders for their leading-edge innovation, have invested billions of dollars in China to participate directly in China's grow especially necessary to combat and offset the perceived high rate of software piracy in China.
The U.S. Department of Commerce, along with the Department of State and Office of the U.S. Trade Representative, have been working hard to continue to have access to Chinese government customers. We will continue to work vigorously to achieve this goal." Which quote from the passage represents a specific example of a trade barrier?
A)
B)
C)
D)
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17)
Hide
Correct This is microeconomic law states that, if everything else is equal, the quantity of a good supplied rises as the price rises. This is done to maximize profits. 17) Which relationship is the BEST example of the Law of Supply?
A)
The quantity of a good supplied rises as the price rises.
B)
The quantity of a good supplied rises as the price falls.
C)
The quantity of a good supplied falls as the price rises.
D)
The quantity of a good supplied is not impacted by price.
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18)
Hide
Correct
An example of credit is when a person borrows money from a finance company to buy a car. Once credit is extended to a person and is used for a purchase, the credit i the financial obligation to repay the loan. 18) What is an example of credit?
A)
B)
C)
D)
A person pays interest on an existing mortgage.
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19)
Hide
Incorrect
The Federal Trade Commission's "do-not-call" registry is intended to allow consumersto engage in voluntary transactions with businesses. The FTC's amended rule
fraudulent business transactions while eliminating telemarketing "scams" by fining businesses. 19) The amended Telemarketing and Consumer Fraud Abuse Protection Act of 1994 states:
A consumer [can] stop calls from all companies within the FTC's jurisdiction by placing his or her telephone number on a central "do-not-call" re "established business relationship" with the seller on whose behalf the call is made. The Federal Trade Commission's "do-not-call" registry is intended to
A)
reduce the amount of junk mail received by consumers.
B)
permit telemarketing calls to new clients on the registry.
C)
restrict all telemarketing calls to consumers on the registry list.
D)
allow consumers to engage in voluntary transactions with businesses.
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Fundamental Economic Concepts (SSEF3) Specialization (SSEF5) Roles Of Government
20)
Hide
Correct Money can be easily converted into goods or services.This is an example of the function of money being used as a medium of exchange 20) Money can be easily converted into goods or services. This is an example of which "function of money"?
A)
store of value
B)
measure of value
C)
medium of exchange
D)
commodity transfer
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21)
Hide
Incorrect
Bob will MOST LIKELY increase his earnings potential in the long-term if he spendsmoney for additional training and education. This might make his short-term fina make much, much more money than if he had not gone to school. 21) Bob would like to increase his earnings. The option MOST LIKELY to increase his earnings potential in the long-term is to
A)
spend money to renew current training.
B)
take a similar position with a different company.
C)
spend money for additional training and education.
D)
laterally transfer to a different job within his company.
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22)
Hide
Correct The property tax is the tax that is collected from homeowners. Property is another word for land or buildings that a person owns. 22) Of the following taxes, what is the name for the taxes that all homeowners must pay?
A)
Sales Tax
B)
Income Tax
C)
Excise Tax
D)
Property Tax
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23)
Hide
Correct
Number of Workers Total Costs Marginal Costs Total Revenue Marginal Revenue Total Profi 0 1 2 3 4 5 $50.00 $140.00 $230.00 $320.00 $410.00 $500.00 --$12.86 $6.92 $5.00 $3.75 $3.21 --$105.00 $300.00 $570.00 $930.00 $1,3500.00 --$15.00 $15.00 $15.00 $15.00 $15.00 $ (50.00) $ (35.00) $70.00 $250.00 $520.00 $850.00
6 7 8 9 10 11
$590.00 $680.00 $770.00 $860.00 $950.00 $1,040.00
$4.50 $4.74 $10.00 $15.00 $22.50 ---
$1,650.00 $1,935.00 $2,070.00 $2,160.00 $2,220.00 $2175.00
$15.00 $15.00 $15.00 $15.00 $15.00 $15.00
$1,060.00 $1,210.00 $1,300.00 $1,300.00 $1,270.00 $1,135.00
A)
B)
C)
10
D)
11
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24)
Hide
Correct The federal personal income tax is an example of a progressive tax. A progressive taxmeans the rate of tax rises as income rises (up to a certain point). 24) The federal personal income tax is an example of what kind of tax?
A)
regressive tax
B)
progressive tax
C)
value-added tax
D)
proportional tax
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25)
Hide
Correct
These are all arguments that would be used by someone opposed to the North American Free Trade Agreement. Even though the agreement eliminates barriers to to such activities. Of course, arguments about the merits of free trade are usually accompanied by political partisanship. 25) "Real wages for Mexican industrial workers declined 13.5% since 1994." "Over 500,000 U.S. employees have lost their jobs after their companies moved to Mexico." "Mexico has lost over 1 million farming jobs." "Illegal immigration to the U.S.. has approximately doubled since 1994." These are all arguments used by someone who would be OPPOSED to
A)
B)
C)
the creation of tariff on imported goods.
D)
the construction of a wall along the US-Mexico border.
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26)
Hide
Correct
There are a few main characteristics of monopolistic competition, most importantly that there are many producers and many consumers in a given market, and tho price differences among the competitors' products. Therefore, the relevant example is one in which A college student chooses cellular service based on the availability 26) Which scenario BEST represents monopolistic competition?
A)
B)
C)
D)
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27)
Hide
Correct Trust accounts are a financial service least likely offered by credit unions. These trustservices are more often handled by commercial banks. 27) Which financial service is LEAST LIKELY to be offered by a credit union?
A)
trust accounts
B)
savings accounts
C)
automobile loans
D)
certificates of deposit
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28)
Hide
Correct
A)
land and surgeon
B)
capital and oil rig
C)
D)
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29)
Hide
Incorrect
A GDP is the total of the value of all the goods and services produced in a country. Regardless of when it is sold, a vehicle produced in the summer of 2009 would be cou 29) A vehicle produced in the summer of 2009 and sold in December of 2012 would be counted in which years GDP?
A)
2009
B)
2010
C)
2011
D)
2012
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30)
Hide
Correct
When the supply curve moved to the left, a decreased supply was indicated. A decreased supply would probably cause a rise in price. Thus, the equilibrium price w
30)
In the graph, what happened to the equilibrium price when the supply curve moved from S1 to S2?
A)
It did not change.
B)
The equilibrium price went up.
C)
The equilibrium price went down.
D)
It indicated a decrease in demand.
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31)
Hide
Incorrect
A)
B)
C)
D)
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32)
Hide
Correct Kim should compare each loan's annual percentage rate. Individuals have a beacon score and there is no debt-to-credit ration or average prime rate. 32) Kim is deciding between two loan offers. To make the BEST decision, Kim should
A)
research the beacon score of each loan.
B)
analyze each loan's debt-to-credit ratio.
C)
compare each loan's annual percentage rate.
D)
investigate the average prime rate of both loans.
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33)
Hide
Incorrect
Machinery, plastics, electronic equipment, and steel are capital resources. Except fortextiles, Peru exports natural resources. Therefore, Peru imports mainly capita resources. 33) Principle Imports and Exports of Peru Imports Exports
Machinery
Gold
Plastics
Copper
Electronics
Textiles
Steel
Petroleum
Based on the information in the table, which statement about Perus economy is true?
A)
Peru imports and exports mainly natural resources.
B)
Peru imports and exports mainly capital resources.
C)
Peru imports mainly capital resources and exports mainly natural resources.
D)
Peru imports mainly natural resources and exports mainly capital resources.
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34)
Hide
Correct Demand for the product is inelastic when a modest price increase has little or no effect on demand. 34)
A modest price increase for a monthly cell phone package has had little or no effect on demand. This MOST LIKELY indicates that demand for th
A)
complementary.
B)
elastic.
C)
inelastic.
D)
variable.
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35)
Hide
Correct
She would need to check her credit history from a credit reporting agency.. It's called a credit report, and there are three major credit reporting agencies who- usu 35) Sarah is concerned about identity theft. She wants to check her overall credit worthiness. Sarah should MOST LIKELY
A)
check her credit history from a bank.
B)
check her credit history from her employer.
C)
check her credit history from a credit card company.
D)
check her credit history from a credit reporting agency.
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36)
Hide
Correct
The characteristic of capitalism that buyers and sellers will freely and willing exchange inmarket transaction is called voluntary exchange. This combines with "profit working. 36)
In 1776 with An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith challenged the prevailing belief in mercantilist policie buyers and sellers will freely and willingly exchange in market transaction is called
A)
profit motive.
B)
economic freedom.
C)
voluntary exchange.
D)
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37)
Hide
Correct
A)
B)
C)
D)
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38)
Hide
Correct
Tariffs are taxes on the import or export of goods from a country. Tariffs are generally "protectionist" in nature, meaning that many are designed to protect certain indu decrease trade between nations. 38) What are tariffs?
A)
political boundaries between nations
B)
military blockades of specific countries
C)
disputes between state governments over boundaries
D)
taxes on the import or export of goods from a country
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39)
Hide
Correct
Workers concentrating their efforts on a limited number of tasks, thereby increasingproductivity is called specialization. Adam Smith's 1776 classic, The Wealth of N labor and specialization. 39) Workers concentrating their efforts on a limited number of tasks, thereby increasing productivity is called
A)
entrepreneurship.
B)
homogenization.
C)
sequestration.
D)
specialization.
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40)
Hide
Correct
The process by which the Federal Reserve controls the supply, availability, and cost ofmoney in order to keep the economy stable is monetary policy. Setting discou Federal Reserve keeps monetary policy in check. Fiscal policy refers to government borrowing, spending, and taxation. 40) The process by which the Federal Reserve controls the supply, availability, and cost of money in order to keep the economy stable is
A)
monetary policy.
B)
the interest rate.
C)
fiscal policy.
D)
the discount rate.
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41)
Hide
Incorrect
John D. Rockefeller is synonymous with the business term trust. By buying out both the companies that competed against his company Standard Oil and those wh productive resources, he effectively killed any competition against him for decades. This is now legally prevented by US law and Supreme Court decisions in the past cen 41) This term is used to refer to a type of business organization created in the 19th century that was meant to eventually produce a monopoly.
A)
trust
B)
cartel
C)
laissez-faire
D)
pure competition
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42)
Hide
Incorrect
In the circular flow model, households earn income from the factor market and businesses earn revenue from the product market. Additionally, households spendmon can supply product markets with goods andservices. 42) Which statement about the circular flow model is CORRECT?
A)
Businesses earn income from both the factor and product markets.
B)
Households earn income from both the factor and product markets.
C)
Households earn income from the product market, and businesses earn revenue from the factor market.
D)
Households earn income from the factor market and businesses earn revenue from the product market.
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43)
Hide
Correct
The sanctions were in retaliation for a ban on U.S. hormone-treated beef by the EU, orEuropean Union. The EU and the US cannot agree on the safety of beef inject higher yield of meat. 43)
In 1999, the U.S. announced trade sanctions worth $116.8 million, targeting goods from France, Germany, Italy and Denmark. The sanctions we treated beef by which organization?
A)
ASEAN
B)
EU
C)
NAFTA
D)
WTO
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44)
Hide
Correct Division of labor and job specialization usually result in increased efficiency andproductivity. This reduces production costs and increases profits. 44) What is the primary purpose of job specialization?
A)
regional self-sufficiency
B)
increased consumer income
C)
increased marginal utility
D)
increased efficiency and productivity
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45)
Hide
Correct
A)
bartering
B)
socialism
C)
free enterprise
D)
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46)
Hide
Incorrect Human capital in a business includes the knowledge, skills, and abilities of the people in that business. 46)
Before the opening of his sporting goods store, Mr. Stevens researches the types of sports equipment most likely to sell in his area. The knowle
A)
labor.
B)
human capital.
C)
physical capital.
D)
allocation of resources.
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47)
Hide
Correct
All are considered benefits of free trade EXCEPT protection of domestic industries.Protectionists favor trade barriers instead of free trade to protect domestic indus 47) All of the following are considered benefits of free trade EXCEPT
A)
quota reduction.
B)
growth of trade.
C)
protective tariff reduction.
D)
protection of domestic industries.
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48)
Hide
Correct
The article MOST LIKELY references ASEAN, or Association of Southeast Asian Nations. Members include the growing economies of Singapore, Indonesia, Philippine 48)
The September 27, 2003, Toronto Star had a headline reading, "Global Economy is Shifting Focus to East Asia". The article MOST LIKELY referen
A)
ASEAN.
B)
EU.
C)
NAFTA.
D)
OPEC.
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49)
Hide
Correct
According to the passage, it can be assumed that both the engineer and surgeon areprofessional positions. This can be deduced because each require a great degr 49) Help Wanted
Aircraft manufacturer seeking engineers with advanced degree in physics and no less than 15 years experience. Many positions available. Send According to the passage, what generalization can be made?
A)
The house cleaner is a semi-skilled position, while the engineer is a professional position.
B)
The lifeguard is an unskilled position, while the surgeon is a skilled position.
C)
Both the house cleaner and lifeguard are semi-skilled positions.
D)
Both the engineer and surgeon are professional positions.
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50)
Hide
Correct
Surplus grain is an example of absolute advantage. It might also be considered acomparative advantage if the U.S. produces the grain relatively more efficiently tha 50) A Weak Dollar by The Columbus Dispatch, September 7, 1999
The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen...It also has lost ground to the According to the passage, Midwestern farmers have surplus grain to sell. This is an example of
A)
business cycle.
B)
comparable worth.
C)
infant industries.
D)
absolute advantage.
1)
Incorrect
Increased education and training within a nation will most likely result in an increase inGross Domestic Product (GDP). An increase in a nation's literacy rate and a well-t increased GDP. 1) Increased education and training within a nation will most likely result in
A)
a decrease in entrepreneurship.
B)
a decrease in Gross Domestic Product (GDP).
C)
an increase in Gross Domestic Product (GDP).
D)
an increase in the presence of natural resources.
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2)
Correct
In a diagram of the circular flow of economic activity, businesses buy productiveresources from resource markets. Individuals then buy the finished goods and serv 2) In a diagram of the circular flow of economic activity, businesses
A)
receive goods and services from productive markets.
B)
buy productive resources from resource markets.
C)
purchase goods and services from individuals.
D)
derive income from resource markets.
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3)
Correct
The Pullman Strike was instigated after management slashed wages but not the cost of rents it charged the workers in its factory towns. The American Railway Unio government to help break the strike. Using the Sherman Anti-trust Act, the government forced an end to the strike, showing that the needs and concerns of union mem executives. 3) The Pullman Strike (1894) was significant in American labor history because it showed that
A)
unions were powerful enough to break the restrictions placed on them by management.
B)
unions were infiltrated by anarchists after people were killed during the protest in Chicago.
C)
the U.S. government was willing to back the concerns of working-class people instead of backing corporate giants.
D)
the needs and concerns of union members mattered less to the government than the needs and concerns of industrial executives.
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4)
Incorrect
Of the choices offered, the BEST example of the concept of conflict is the creation of the North American Free Trade Agreement in 1994. The purpose of NAFTA is to red competitive in the global marketplace. 4) Which situation is the BEST example of the concept of cooperation?
A)
the creation of the North American Free Trade Agreement in 1994
B)
the "Water War" that exists between Georgia, Alabama, and Florida
C)
the 1991 Persian Gulf conflict and the 2003 U.S. invasion of Iraq
D)
the embargo that the United States enforces against products from Cuba
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5)
Incorrect
While it is true that "sin taxes" disproportionally affect lower income groups, this is not a reason that governments would want to adopt them. Instead, governmen smoking- that could be more costly down the road. 5)
State governments often decide to place a "sin tax" on specific products or goods, like alcohol and tobacco. Which rationale is LEAST LIKEL
A)
"Sin taxes" encourage people to consume less of a good because it is illegal.
B)
"Sin taxes" quickly raise funds through indirect taxes affecting users only.
C)
"Sin taxes" disproportionally affects lower income groups.
D)
"Sin taxes" generate funding for special projects.
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6)
Correct Entrepreneurship is defined as the ability and risk-taking involved in starting a new business. Mr. Simpson is the entrepreneur in this undertaking. 6)
Mr. Simpson has decided to start a new company to produce bobble-head dolls. He has hired a contractor to build his factory and a manag of production?
A)
capital
B)
entrepreneurship
C)
labor
D)
land
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7)
Correct
Aiden should MOST LIKELY research if his property insurance policy will include flood damage benefits. He is considering property insurance, not other types of ins 7) Aiden is considering types of insurance to cover his newly-purchased home near a river. Aiden should MOST LIKELY research
A)
if his health insurance includes injuries due to construction.
B)
if his life insurance premiums will decrease due to owning a home.
C)
if his property insurance policy will include flood damage benefits.
D)
if his automobile insurance rates will increase at his new location.
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8)
Correct
A)
increase.
B)
decrease.
C)
remain stable.
D)
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9)
Correct
As the value of the dollar falls relative to other currencies, the MOST LIKELY result isincreased foreign demand for U.S. goods along with decreased U.S. demand for 9)
If the price of buying a car starts rising in the United States, consumers may need to look no further than the dollar's recent slide against m farmers may find it easier to sell surplus grain overseas if a weak dollar makes it cheaper for foreigners to buy U.S. goods.The dollar spent m Japanese yen...It also has lost ground to the euro. The situation described in the passage would MOST LIKELY result in
A)
stable foreign demand for U.S. goods.
B)
stable U.S. demand for foreign goods.
C)
increased foreign demand for U.S. goods.
D)
increased U.S. demand for foreign goods.
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10)
Correct Although age at purchase date may be a factor, it is not listed on the chart, and is therefore the answer. 10) Forms of Payment Single Sum
Reason for buying
Pays out When
Term Life Insurance Provide income for dependents Whole Life Insurance
A person dies A person dies, or borrows the cash value of the policy
Single Sum
Deferred Annuities
To accummulate money in a tax-deferred product
A person makes withdrawls
Single Sum
Immediate Annuities
To assure people don't "outlive income"
One period after purchase, stops at death
Lifetime Incom
A)
pay out options.
B)
purpose for buying.
C)
D)
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11)
Correct If China enforces the software procurement regulation, the MOST LIKELY result is U.S. software companies will have limited access to Chinese markets. "China's industry to sell software products and services to the Chinese government." 11) United States Combating Use of Standards as Trade Barriers by Benjamin H. Wu, accessed from usinfo.state.gov/xarchives
Tensions have arisen, however, when certain countries take restrictive action that could potentially exclude market access to U.S. business example where China has caused great concern with U.S. industry in its application of domestic source requirement standards - China's pe industry to sell software products and services to the Chinese government. U.S. software companies, which are widely recognized as indus China to participate directly in China's growing information technology market. This is especially necessary to combat and offset the perce If China enforces the software procurement regulation, the MOST LIKELY result is
A)
U.S. software companies will have limited access to Chinese markets.
B)
U.S. software companies will increased their access to Chinese government customers.
C)
U.S. software companies will increase their presence in the information technology market.
D)
U.S. software companies will invest billions of dollars in China to combat software piracy.
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12)
Incorrect According to the diagram, equililbrium price occurred mid-year in 1989. 12)
Washboard mussels are found along Wisconsin's portion of the Mississippi River. According to the diagram, equililbrium price occurred in w
A)
1988
B)
1989
C)
1991
D)
1995
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13)
hy are regressive taxes considered heaviest on low income taxpayers? A)
Low income people should not have to pay taxes.
B)
The tax is on their income, and they pay a higher income tax.
C)
A sales tax is going to be a greater percent of a wealthy persons income than a low income persons income.
D)
The tax is levied on something other than income but ends up being a higher percentage of their income than it would be for a higher earner.
From this passage, it can be concluded that A)
Arcadonia should specialize in producing plywood.
What is a main goal of the Federal Reserve in its monetary policy?
A)
lowering taxes
B)
to curb recessions
Assuming that the graph follows the normal laws of economics, the line represents
A)
demand.
B)
supply.
If the government decided to subsidize the production of bobble-head dolls A)
the cost of substitutes will rise.
B)
the supply curve will shift to the left.
C)
the price of bobble-head dolls will rise.
D)
the supply curve will shift to the right.
Currently, how are foreign exchange rates established? A)
Foreign exchange rates are unregulated.
Correct The Senator's plan hopes that using tax breaks will allow businesses to upgrade outdated equipment and spur economic growth, these are the capital investments. 13) Senator English Touts Tax Bills Aimed to Blunt Impact of Slowing Economy January 24, 2008
The Job Creation Economic Stimulus Act of 2008, components of which have received broad support from the business community, provid companies to deduct from their taxes the cost of purchasing equipment or other capital investment. This has the added benefit of making means the difference between being able to afford new equipment or not. Expensing is a proven vehicle for injecting money into the econ
Under the English plan, employers could recover up to 100 percent of their capital investment if they purchase and place in service high p
among others, before January 1, 2009. How will the Senator's plan spur economic growth?
A)
The business community will support the plan.
B)
Using tax breaks will allow businesses to upgrade outdated equipment.
C)
Employers can use 100 percent of all their taxes to purchase new equipment.
D)
Businesses will be able to save the money they will receive back from taxes.
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14)
Correct
In a command economy the central government determines the prices of goods andservices. Business owners and supply and demand play roles in market econom 14) In a command economy, how are the prices of goods and services determined?
A)
business owners
B)
the central government
C)
market forces of supply and demand
D)
independent agencies and independent regulators
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15)
Correct
In the early 1970s There was an international oil embargo that caused gas prices to rise greatly, in some cases quadrupling in the course of months. The governme different: U.S. cut back on oil exploration and improvements to existing equipment. 15) Why did the United States government place price controls on petroleum companies in the early 1970s?
A)
Oil companies needed more money in order to increase exploration.
B)
Oil executives had been criticized for spending money wastefully.
C)
There was an international oil embargo that caused gas prices to rise.
D)
People were refusing to buy gasoline because of its link to terrorist groups.
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16)
Correct
In a capitalist economy, the consumer is king since consumers determine what products will be produced. In other words, the choices exhibited by consumers thro certaingoods being produced more often or some goods whose production is ended. This concept is referred to as consumer sovereignty. 16) Why is the consumer considered "king" in a capitalist economy?
A)
B)
C)
D)
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17)
Correct
Before money was invented, merchants and customers bartered to exchange goods andservices. For example, wheat might be exchanged for cattle. In a barter econom 17) Before money was invented, how were goods and services exchanged?
A)
Kings evenly distributed items.
B)
Merchants and customers bartered.
C)
Individuals were self-sufficient.
D)
Priests evenly distributed items.
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18)
Correct In relation to the Indian Rupee, the Canadian dollar is worth significantly more. 18) Foreign Exchange Rates
County / Currency Foreign Currency in U.S. Dollars U.S. Dollars in Fo UK / Pound Japan / Yen India / Rupee Canada / Dollar 2.0292 .0084 .0248 .9394 .4928 118.9599 40.3950 1.0645
A)
B)
C)
D)
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19)
Incorrect
Many companies offer credit cards with compounding interest. Usually this is called the annual percentage rate, or APR. When the interest is compounded frequent 19)
Many companies offer credit cards with compounding interest. Usually this is called the annual percentage rate, or APR. When the interes
A)
the APR will increase steadily over time.
B)
balances on the credit card grows faster.
C)
cash advance limits on the credit card decrease over time.
D)
the company receives less profit from the credit card balance.
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20)
Incorrect Insurance companies consider all of the factors EXCEPT your ethnicity when determininginsurance costs. This is explicitly forbidden by federal law. 20)
You are purchasing your first vehicle. The insurance company informs you that all of these factors will be considered when determining the
A)
B)
your ethnicity.
C)
your gender.
D)
your age.
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21)
Correct
The profit motive is a characteristic of a free enterprise system. Thus, the desire to earn a profit motivates individuals to start a business and to make their product 21) In a free enterprise system, what motivates individuals to start a business?
A)
the risk of failure
B)
the need for job security
C)
the desire to earn a profit
D)
the desire to make economic decisions
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22)
Incorrect
This portion of FDR's speech MOST LIKELY illustrates his belief that governments should get actively involved in addressing unemployment. FDR's view of the gove
in that he created theNew Deal programs to address the problems of the Great Depression. 22)
Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplis would treat the emergency of a war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate a -Franklin D. Roosevelt, First Inaugural Address, 1933
Four years after the stock market crash, FDR became the thirty-second president. This portion of his speech MOST LIKELY illustrates his bel
A)
governments should go to war to increase the number of jobs in the military.
B)
governments should get actively involved in addressing unemployment.
C)
the natural resources of the U.S. were running out.
D)
the U.S. was on the brink of WWII.
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23)
Correct Because banks are profit-making institutions, the interest charged by banks on loans must be more than the interest earned by customers. The difference is called 23) Why is there a difference between interest charged and interest earned?
A)
B)
C)
D)
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24)
Incorrect
With the development of a world market, workers must compete with workers in other countries whose wages are not as high as those of workers in this country. T command higher wages. 24)
As unions in the United States attempt to gain higher wages and better benefits for their members, the GREATEST problem is an increase i
A)
union membership.
B)
global competition.
C)
the number of skilled workers.
D)
the demand for the products they make.
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25)
Incorrect
The governments fiscal policy is a major force in the American economy. If the government increases taxes, it will reduce peoples disposable income. That, in turn stabilize. 25) If the federal government is attempting to slow inflation, a fiscal policy BEST serving this purpose would be
A)
increasing taxes.
B)
decreasing taxes.
C)
encouraging imports.
D)
investing in business.
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26)
A)
10.3 pesos.
B)
103 pesos.
C)
900 pesos.
D)
1034 pesos.
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27)
Correct Businesses sell the goods and services they produce in the product market. Individuals exchange money (income they have earned) for these goods and services. 27)
According to the diagram showing the circular flow of goods and resources, where do businesses sell the goods and services they produce?
A)
B)
C)
D)
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28)
Incorrect
A monetary policy of low interest rates MIGHT impact consumers because it lowers savings rates. A lower interest rate results in a smaller return on savings and a boost is inflation, notdeflation. 28) How does a monetary policy of low interest rates affect consumers?
A)
It promotes deflation.
B)
It lowers savings rates.
C)
It lowers spending rates.
D)
It lowers the cost of imports.
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29)
Correct
10 workers cause the marginal costs to exceed the marginal benefits. Although the marginal costs for 11 workers are also higher that the marginal revenue, the margina 29) Number of Workers Total Costs Marginal Costs Total Revenue Marginal 0 1 $50.00 $140.00 --$12.86 --$105.00 --$15.00
2 3 4 5 6 7 8 9 10 11
$230.00 $320.00 $410.00 $500.00 $590.00 $680.00 $770.00 $860.00 $950.00 $1,040.00
$6.92 $5.00 $3.75 $3.21 $4.50 $4.74 $10.00 $15.00 $22.50 ---
$300.00 $570.00 $930.00 $1,3500.00 $1,650.00 $1,935.00 $2,070.00 $2,160.00 $2,220.00 $2175.00
$15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00
The owners of a local business are making a rational decision about how many workers to hire. How many workers would cause the margin
A)
B)
C)
10
D)
11
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30)
Correct
The GDP, or Gross Domestic Product, is best defined as the market value of all goods andservices produced in a country. Each country in the world has its own GDP, and economies. 30) Which of these is the BEST definition of GDP?
A)
B)
C)
D)
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31)
According to the information on the washboard mussel harvest, the approximate price for mussels in 1993 was A)
$0.25 per pound.
B)
$1.50 per pound.
C)
$40 per pound.
D)
$600 per pound.
Early Keynesian theorists developed the balanced budget multiplier, which suggests that an equal increase in government spending and tax revenue will boost aggregate demand by precisely the increase in the amount spent. How MIGHT governments fund programs in keeping with early Keynesian theorists? A)
Increase in deficit spending and income taxes
Correct
According to the chart, individuals (households) spend their income in the productmarket. This income was earned in the factor market when they sold their labor. 31) According to this diagram showing the circular flow of goods and resources, where do individuals spend the income they earn?
A)
B)
C)
D)
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32)
Correct
The machinery is a new technology that would help to increase the supply of coffee, therefore the price would decrease because there would be more coffee available more plentiful to consumers. 32)
If a new machine was developed that picked coffee beans twice as fast as is currently possible, what would you expect to happen to the pr
A)
The price would increse to pay for the new machinery.
B)
The price would decrease because there would be more coffee available.
C)
The price would increase due to greater demand for coffee picked this way.
D)
The price would decrease because fewer would want coffee picked by machine.
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33)
Correct If you note that the lines represent education and the vertical axis represents income, then the answer is clear: Investment in education can lead to higher annual 33) What generalization about educational attainment and annual earnings can be made according to the graph?
A)
B)
C)
Which of these will have an effect on the GDP of the country? A)
Monty buys a Picasso painting.
B)
Lisa loses $20.00 in a bet with Bart.
C)
Ned fixes Jay's car without buying any new parts.
D)
The Shelbyville Whoopee Cushion company makes 1,000 to export to China.
D)
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Fundamental Economic Concep (SSEF6) Productivity
34)
Correct
The vast majority of Australian economic decisions are made by the producers andconsumers of products. This is the primary component of a market economy, mu 34) Australia has one of the most advanced market economies in the world, meaning the majority of economic decisions are made by
A)
their executive branch of government.
B)
a central economic planning committee.
C)
their legislative branch of government.
D)
the producers and consumers of products.
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35)
Incorrect
Because the cable provider is the only one, it is considered to have a monopoly. This is sometimes allowable if having competition would cause a hardship on the in 35)
Many city governments grant operating licenses to a specific cable television company. This license to be the only cable provider is called a
A)
monopoly.
B)
oligopoly.
C)
pure competition.
All of the following would cause a shift to the left of the demand curve EXCEPT for A)
an increase in taxes.
B)
D)
reduction in exports.
C)
increased money supply.
D)
declining consumer spending
What term BEST describes the U.S. government's policies towards businesses in the la 19th century? A)
Imperialist
B)
Laissez-faire
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Microeconomic Concepts (SSEMI4) Organization And Role Of Busine
36)
Incorrect
GDP is often considered the most important statistic in valuing the health of a country's economy. Since the GDP measures the value of all final goods produced in a cou decrease in the GDP. 36) An increase in Americans buying imported goods would result in
A)
no change in the GDP.
B)
a decrease in the GDP.
C)
an increase in the GDP.
D)
a severely damaged GDP.
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37)
Incorrect Due to the increased buying power of foreign currencies, one benefit of a weak dollar isincreased surplus grain sales. 37) A Weak Dollar by The Columbus Dispatch, September 7, 1999
If the price of buying a car starts rising in the United States, consumers may need to look no further than the dollar's recent slide against m
On the other hand, economically depressed Midwestern farmers may find it easier to sell surplus grain overseas if a weak dollar makes it c
The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen...It also has lost ground to According to the passage, one benefit of a weak dollar might be
A)
increased car sales.
B)
decreased car sales.
C)
increased surplus grain sales.
D)
decreased surplus grain sales.
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38)
Correct Lower-income families may be unable to afford private health insurance. That might BEST account for why approximately 15% of the population is without health 38)
According to the U.S. Census Bureau, 85% of Americans have health insurance. Which generalization might BEST account for why approxim
A)
Lower-income families may be unable to afford private health insurance.
B)
Older Americans usualy decide they do not need or want health insurance.
C)
High-income families use most of the funds reserved for public health insurance programs.
D)
A greater percentage of the population in the northeast are less likely to need insurance.
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39)
Incorrect
The characteristic of capitalism that buyers and sellers will freely and willing exchange inmarket transaction is called voluntary exchange. This combines with "profit 39)
In 1776 with An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith challenged the prevailing belief in mercantilist po willingly exchange in market transaction is called
A)
profit motive.
B)
economic freedom.
C)
voluntary exchange.
D)
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40)
Correct
Banks and other financial institutions use savings deposits to help borrowers by using deposits to make loans. Loans are made at a higher rate of interest than the origin 40) Banks and other financial institutions use savings deposits to help borrowers by
A)
using deposits to make loans.
B)
keeping deposits to earn interest.
C)
saving deposits in a secure vault.
D)
spending deposits to improve the bank's safety.
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41)
Incorrect
The MOST LIKELY result of government programs to address the Great Depression in the United States was that deficit spending increased. Other than a short period of 41) The MOST LIKELY result of government programs to address the Great Depression in the United States was that
A)
B)
C)
D)
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42)
Incorrect The Georgia business woman could conclude that her business had made a profit.Income minus costs equals profit. 42)
A Georgia business woman noticed that after she had paid all the costs of conducting her business that year a substantial amount of mone
A)
Her business had made a profit.
B)
Her business had many capital goods.
C)
Her business had a cash flow problem.
D)
Her business had depreciated in value.
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43)
Correct William puts 10% of his income into his new computer fund. From this weeks $50 pay, William should put $5 into his new computer fund. 43)
When William got a summer job delivering newspapers, he decided to budget his income. This week, William made $50 at work. According to Williams budget, how much money from this weeks pay should he put into his new computer fund?
A)
$5
B)
$10
C)
$15
D)
$20
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44)
Incorrect The Law of Supply states that the quantity supplied of a product will increase as theprice increases and will decrease as the price decreases. 44) The Law of Supply states that
A)
the supply of a product is not affected by its price.
B)
when the supply of a product decreases, the price of the product falls.
C)
when the supply of a product increases, the price of the product rises.
D)
the quantity supplied of a product will increase when the price of that product increases.
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45)
Incorrect
If the Federal Reserve wanted to deter inflation, it would increase interest rates to slow down consumer spending and economic growth. A decrease in the price of amount of moneytaken in by the government, and remove that money from the marketplace. This would slow down growth and deter inflation. 45) Which of these would deter inflation?
A)
a decrease in interest rates
B)
an increase in economic growth
C)
an increase in consumer spending
D)
a decrease in the price of securities
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46)
Incorrect This interaction of supply and demand and the effect it has on price is a basic characteristic of a market economy. 46) In a market economy, prices are established by
A)
B)
C)
D)
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47)
Incorrect
Apac would benefit from stimulation of capital resources. Modern machinery could greatly increase their production, yielding more produce to sell. Additionally, be away. 47)
Over 80% of the people living in the Apac District in Uganda are farmers. However, profits are minimal due to the high costs of farming wit Apac would benefit from a stimulation of which type of resource?
A)
capital
B)
human
C)
marketing
D)
natural
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48)
Incorrect
National defense, protecting emerging industries, protecting domestic jobs, and keepmoney at home are MOST LIKELY arguments in favor of protectionism. The No opposite of protectionism. 48)
National defense, protecting emerging industries, protecting domestic jobs, and keep money at home are MOST LIKELY arguments in favor
A)
FTA.
B)
NAFTA.
C)
protectionism.
D)
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49)
Correct
The introduction of new technology often increases efficiency and reduces productioncosts. This increases profits and thus motivates producers to increase supply. 49) Which factor might cause an increase in the supply of a product?
A)
a decrease in productivity
B)
fewer sellers in the marketplace
C)
the introduction of new technology
D)
an increase in the cost of raw materials
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50)
Correct
A)
B)
C)
D)
1)
Incorrect
Country A and Country C would make the most effective trading partners, since Country A exports mineral fuels and Country C imports them, and Country A import 1) Principal Imports and Exports Country Principal Export Principal Import A B C D E Mineral Fuels Steel Machinery Machinery Mineral Fuels Machinery Mineral Fuels Mineral Fuels Clothing Machinery
Use the chart to answer the question. Which two countries are economically interdependent and would make the MOST effective trading partners?
A)
Country B and Country D
B)
Country A and Country C
C)
Country A and Country E
D)
Country C and Country D
International Economics
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(SSEIN1) Trade
2)
Correct
A)
land.
B)
capital.
C)
goods and services.
D)
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3)
Correct
According to the chart, individuals (households) spend their income in the product market. This income was earned in thefactor market when they sold their labor.
3)
According to this diagram showing the circular flow of goods and resources, where do individuals spend the income they earn?
A)
B)
C)
D)
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4)
Correct Comparative advantage is correct. 4) When one country can produce a product more cheaply than another country can, this is called
A)
a tariff.
B)
free trade.
C)
comparative advantage.
D)
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5)
Correct
Monetary policy is BEST described as actions by the Federal Reserve System to expand or contract the moneysupply. Controlling interest rates is a key component 5) Monetary policy is BEST described as
A)
B)
C)
D)
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6)
Correct In relation to the Indian Rupee, the Canadian dollar is worth significantly more. 6) Foreign Exchange Rates
County / Currency Foreign Currency in U.S. Dollars U.S. Dollars in Fo UK / Pound Japan / Yen India / Rupee Canada / Dollar 2.0292 .0084 .0248 .9394 .4928 118.9599 40.3950 1.0645
A)
B)
C)
D)
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7)
Correct
Tariffs raise prices on imports, while quotas set limits on imports, representing the best statement of differences between tariffs and quotas. Both are designed to 7) Which statement BEST reflects the difference between tariffs and quotas?
A)
Tariffs raise prices on exports, while quotas set limits on imports.
B)
Tariffs raise prices on imports, while quotas set limits on exports.
C)
Tariffs raise prices on exports, while quotas set limits on exports.
D)
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8)
Correct
Parking tickets, public library fines, littering fines, and speeding tickets are a few examples of negative incentives used to discourage specific actions of people. Usin 8) Which of the incentives listed is MOST LIKELY a negative incentive used to discourage a specific action?
A)
coupons
B)
parking tickets
C)
frequent flier miles
D)
buy-one, get-one free
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9)
Correct
A)
B)
C)
D)
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10)
Incorrect
In the market clearing price, the supply by sellers meets the demand from buyers. This is also called theequilibrium price. 10) In the market clearing price,
A)
the demand by buyers is rapidly growing.
B)
the supply by sellers meets the demand from buyers.
C)
sellers have provided more goods than the demand from buyers.
D)
sellers have provided enough goods for buyers' demand, but at prices that are too high.
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11)
Incorrect
These are all arguments that would be used by someone opposed to the North American Free Trade Agreement. Even though the agreement eliminates barriers to arguments about the merits of free trade are usually accompanied by political partisanship. 11) "Real wages for Mexican industrial workers declined 13.5% since 1994." "Over 500,000 U.S. employees have lost their jobs after their companies moved to Mexico." "Mexico has lost over 1 million farming jobs." "Illegal immigration to the U.S.. has approximately doubled since 1994." These are all arguments used by someone who would be OPPOSED to
A)
B)
12)
Incorrect
If the federal government attains a balanced budget, the federal debt will not change. Although government spending is balanced and not adding to the debt, the d 12) The federal debt is the total amount borrowed from investors to finance government spending. In 1940, it was $50.7 billion. If the federal
A)
the federal debt will decrease.
B)
the federal debt will not change.
13)
13)
A small company must determine all the possible combinations of goods and services it can produce, given its limited resources and curren options?
D)
production possibilities curve
14)
A)
10.3 pesos.
B)
103 pesos.
C)
900 pesos.
D)
1034 pesos.
15)
Correct
The GDP, or Gross Domestic Product, is best defined as the market value of all goods and services produced in a country. Each country in the world has its own GDP, an economies. 15) Which of these is the BEST definition of GDP?
C)
D)
16)
Incorrect Overall levels of income, employment, and prices are determined by the spending and production decisions of all of the following EXCEPT net imports. Net exports 16) Overall levels of income, employment, and prices are determined by the spending and production decisions of all of the following EXCEPT
D)
net imports.
17)
Correct
The machinery is a new technology that would help to increase the supply of coffee, therefore the price would decrease because there would be more coffee available more plentiful to consumers. 17)
If a new machine was developed that picked coffee beans twice as fast as is currently possible, what would you expect to happen to the pr
A)
The price would increse to pay for the new machinery.
B)
The price would decrease because there would be more coffee available.
C)
The price would increase due to greater demand for coffee picked this way.
D)
The price would decrease because fewer would want coffee picked by machine.
18)
18) The workers in this photo MOST LIKELY represent
A)
capital goods.
B)
dependency ratio.
C)
specialization of labor.
D)
19)
19)
Increased education and training within a nation will most likely result in
A)
a decrease in entrepreneurship.
B)
a decrease in Gross Domestic Product (GDP).
C)
an increase in Gross Domestic Product (GDP).
D)
an increase in the presence of natural resources.
20)
20)
Many companies sell different types of cell phones. Some consumers prefer to use a specific brand because of its different kind of features
A)
monopoly.
B)
oligopoly.
C)
pure competition.
D)
21)
21)
You have decided to buy a car and would like a newer model year. You also want very low miles. Based on the research in the table, how m
A)
$10,500
B)
$12,000
C)
$14,999
D)
$15,999
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22)
Incorrect Misha traveled to India and took $200 in U.S. currency. When Misha exchanged the $200 in India, she received about 8,079 Indian rupees. 22) Foreign Exchange Rates
County / Currency Foreign Currency in U.S. Dollars U.S. Dollars in Fo
Misha traveled to India and took $200 in U.S. currency. When Misha exchanged the $200 in India, she received about
D)
8,079 Indian rupees.
23)
Correct
Because the cable provider is the only one, it is considered to have a monopoly. This is sometimes allowable if havingcompetition would cause a hardship on the inf 23)
Many city governments grant operating licenses to a specific cable television company. This license to be the only cable provider is called a
A)
monopoly.
B)
oligopoly.
24)
Incorrect
Credit must be extended before debt can be assumed. Just because credit is extended does not mean debt is assumed; the borrower must use the credit before it beco be extended. 24) What is the relationship between credit and debt?
C)
Credit must be extended before debt can be assumed.
D)
Debt must be assumed before credit can be extended.
25)
25)
Workers on an assembly line are an example of
D)
specialization.
26)
Correct High school students are more likely to pay for automobile insurance first than any other type of insurance. 26) The first type of insurance high school students are likely to pay for themselves is
A)
life insurance.
B)
property insurance.
C)
automobile insurance.
D)
disability insurance.
27)
Correct
27)
Which of the following would MOST LIKELY cause an increase in the price of an item?
A)
B)
C)
D)
28)
28)
As unions in the United States attempt to gain higher wages and better benefits for their members, the GREATEST problem is an increase i
A)
union membership.
B)
global competition.
29)
A)
"business owner"
B)
"home owner"
C)
"employee"
D)
"student"
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30)
this type of economy. 30)
In this type of economic system, the production of goods and services is controlled by the concept of supply and demand, businesses are o
A)
command
B)
market
C)
mixed
D)
traditional
31)
Correct The Environmental Protection Agency is responsible for administering the Clean Air Act as well as other federal laws that deal with protecting the environment. 31) Which federal government agency is responsible for administering the federal Clean Air Act?
D)
Environmental Protection Agency
32)
32)
Freedom to own the factors of production, subsidized transportation services, and involuntary spending and investments are examples of
A)
mixed economies.
B)
market economies.
C)
command economies.
D)
traditional economies.
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33)
33)
Automobile Comparison 2002 Volkswagen Jetta $12,000 48K
You want to buy a car, and you have decided that safety is the primary concern. After conducting the research in the table, which vehicle s
D)
Volkswagen Jetta
34)
Correct Businesses sell the goods and services they produce in the product market. Individuals exchange money (income they have earned) for these goods and services. 34)
According to the diagram showing the circular flow of goods and resources, where do businesses sell the goods and services they produce?
A)
B)
35)
35)
Marginal benefit: what consumers would be willing to give up in order to purchase or acquire one additional unit of a good. "Marginal benefit" is MOST related to what economic concept?
A)
opportunity cost
36)
36)
What kinds of goods are often exempt from sales taxes at the state level?
A)
clothing
B)
food
C)
gasoline
D)
luxury
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37)
Incorrect
The LEAST LIKELY historical goal of the Federal Reserve's monetary policy is decreasing the national debt. Monetary policy has three goals of maintaining employment, s 37) Which has LEAST LIKELY been the historical goal of the Federal Reserve's monetary policy?
A)
Keeping unemployment rates low
B)
Decreasing the national debt
38)
38)
What should happen to the equilibrium price of whoopee cushions when the price of the rubber necessary to make the cushions declines?
A)
B)
39)
39)
Which of the following is NOT an example of a fixed expense in a budget?
A)
car payment
B)
mortgage payment
C)
car insurance payment
D)
expenses for a birthday party
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40)
40)
Investment in education, training, and skill development has been linked to
C)
increasing earnings for workers.
D)
decreasing political participation.
41)
41)
Which of these is an example of how the U.S. Constitution protects the free enterprise system?
D)
Congress is given the authority to grant patents and copyrights.
42)
42)
Which country has the GREATEST degree of a command economy?
A)
Brazil
B)
Canada
C)
Cuba
D)
Mexico
43)
43)
In 1776 with An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith challenged the prevailing belief in mercantilist policies. The characteristic of capitalism that buyers and sellers will freely and willing
C)
voluntary exchange.
D)
44)
44)
An exchange rate is used to
D)
determine the price of one country's currency in terms of another country's currency.
45)
45)
An unincorporated business owned by a single person, which may or may not have employees, is an example of a(n)
A)
partnership.
B)
corporation.
C)
entrepreneurship.
D)
46)
46)
Inflation is defined as a rise in the general level of prices. When inflation occurs, the buying power of the dollar would
A)
increase.
B)
decrease.
C)
remain stable.
47)
47)
Rapper Lil' Cheez offers to write a hip hop song for singer Mizz T in exchange for Mizz T appearing in his next music video and on his next album. This is a modern example of
A)
sales.
B)
bartering.
48)
the ability of U.S. industry to sell software products and services to the Chinese government."
48)
UBased on Assistant Secretary Wu's testimony, the U.S. Commerce Department is MOST concerned about
A)
rising trade barriers on goods to China.
49)
Correct
The Yen is the monetary unit for Japan. It was introduced during the Meiji Period in the late 1800s.
49)
Although it lost most of its value during and after World War II, the currency of Japan is now one of the strongest in the world. Japan's currency is called the
A)
Riel.
B)
Ruble.
C)
Won.
D)
Yen.
50)
50)
In what situation would union representatives and management representatives seek mediation?
A)
when they are unable to negotiate a contract
B)
when the collective bargaining process was successful
C)
when they want a third party to make the decision for them
D)
when both sides agree on the working conditions and benefits
1)
What is the MOST LIKELY result of specialization in producing Products A and B?
C)
The increased output means the U.S. and Japan can trade excess units of Products A and B.
D)
Specialization means the U.S. will trade 800,000 units of Product B for 60,000 units of Product A.
2)
The union has demanded a cost-of-living adjustment clause in the new contract. What is the purpose of a cost-of-living adjustment?
C)
to counter the effects of inflation
D)
guaranteed stock options for employees
3)
3)
The Federal Reserve Bank uses various measures to change the money supply and encourage economic activity. This is referred to as
A)
fiscal policy.
monetary policy. B)
C)
demand economics.
4)
4)
Which example of productive resources is matched correctly?
A)
land and surgeon
B)
capital and oil rig
5)
5)
Which statement BEST reflects the difference between tariffs and quotas?
D)
6)
6)
Aggregate demand in the U.S. is influenced by both
A)
inflation and debt.
B)
monetary policy and debt.
C)
inflation and fiscal policy.
D)
monetary policy and fiscal policy.
7)
7)
Which of these is MOST LIKELY a result of apartment rent controls?
A)
a shortage of apartments
B)
increased mobility of workers
C)
decreased demand for apartments
D)
a dramatic increase in rental rates
8)
8)
The MOST LIKELY incentive for entrepreneurs to start a new business is
A)
to make a profit.
B)
C)
D)
9)
9)
Established in 1967 in Thailand with more than 500 million members, one of the largest regional markets in the world is
A)
ASEAN.
B)
NAFTA.
C)
NATO.
D)
OPEC.
10)
Correct
A)
for fair and responsive standards to reduce trade barriers.
B)
for fair and responsive standards to increase trade barriers.
11)
Incorrect
11)
Which of these is the BEST definition of GDP?
C)
12)
12)
Coming into effect in 1994, NAFTA encouraged free trade between the United States and which two other countries?
A)
Canada and Cuba
B)
Japan and China
C)
Canada and Mexico
13)
13)
Any time that a person defers payment, they are using
A)
debt.
B)
trade.
14)
Incorrect
14)
In the product market,
A)
B)
15)
15)
National defense, protecting emerging industries, protecting domestic jobs, and keep money at home are MOST LIKELY arguments in favor of
A)
FTA.
B)
NAFTA.
C)
protectionism.
16)
tity demanded increases.
16)
The statement the quantity demanded of a product varies inversely with its price is a definition of
A)
laissez-faire.
B)
the law of demand.
C)
the invisible hand.
17)
17)
One thing people pay for when they pay property tax is
A)
improvements to land.
18)
18)
The BEST example of a regressive tax in the United States is
C)
the federal personal income tax.
D)
19)
19)
Which of these BEST represents capital investment for a company?
C)
D)
20)
20)
Which of the following is MOST LIKELY a result of a high unemployment rate in the United States?
D)
greater government expenditures for transfer payments
21)
21)
Coupons, "buy-one, get-one free" deals, sales, and discounts are
A)
D)
22)
Incorrect
22)
In the mid-2000s problems with corporations such as Enron, Worldcom, and Tyco demonstrated renewed and growing public concern about
A)
the volatile energy market.
B)
unchecked business practices.
23)
23)
You have decided to buy a car and would like a newer model year. You also want very low miles. Based on the research in the table, how much will you have to save for the car?
A)
$10,500
24)
24)
Which type of transaction refers to a flow of MONEY through the economy?
A)
B)
25)
25)
Entrepreneurs develop new goods and services to start a business. Why is entrepreneurship often difficult?
A)
The Federal Reserve has kept interest rates very low. Some might argue that this could lead to
A)
inflation.
B)
deflation.
C)
a strong dollar.
Micah is an exchange student living in Japan. He wants to buy a new-release movie for 2,000 Japanese yen. When he calls home, he discovers the movie sells for $25. Micah decides to
A)
wait because the movie costs relatively the same amount in both countries.
B)
buy the movie in Japan because it is relatively less expensive than in the U.S.
How do private property rights contribute to a capitalist system?
A)
The government owns most of the factors of production.
B)
High quality products and reasonable prices are guaranteed.
C)
Individuals are free to own the resources used to produce goods.
D)
Businesses can determine what to produce based on consumer demand
Most economists believe that a sales tax increase affects which group the MOST?
A)
hourly workers
B)
salaried workers
C)
people with low incomes
D)
people with the highest range incom
Which type of transaction refers to a flow of MONEY through the economy?
A)
B)
Based on the U.S. Census information in the graph,
A)
annual earnings are not impacted by educational attainment.
B)
educational attainment has an inverse relationship to annual earnings.
C)
all workers with higher educational attainment have higher annual earnings.
D)
annual earnings have a generally positive correlation with educational attainment.
Which organization was created to make trade between its members easier?
A)
European Union
Which action would be a change in the governments fiscal policy?
A)
What is meant by the statement "money is a medium of exchange"?
A)
Money is a measure of societal status.
B)
Money is a measure of a product's value.
C)
Money can be traded for goods and services.
firms produce and sell identical products
firms have a relatively small market share consumers are aware of the products and their prices there are few barriers to entry into the market
All of these are describing what market type of market structure?
A)
monopoly
B)
oligopoly
C)
perfect competition
After graduation Lynn plans to tour Brazil before going to college. The value of the money Lynn spends in Brazil will be included in the
A)
balance of trade.
B)
balance of exports.
C)
balance of imports.
D)
finance company agrees to loan money to a buyer for a new washer and dryer. What is this an example of?
A)
The finance company is assuming a new debt.
B)
The finance company is extending credit to a buyer.
C)
The finance company is creating a savings plan for a buyer.
A receipt showing that an investor has made an interest-bearing loan to a bank is a
A)
bond.
B)
pension.
C)
savings account.
D)
certificate of deposit.
While demand is based on consumer purchases, supply is MOST LIKELY based on
A)
producers offering a wide range of prices.
B)
consumer confidence in a complementary product.
C)
During which historical era would you MOST likely find an abandonment of laissez faire economic policies in the United States?
A)
The 1940s
he law of demand is one of the most famous laws in economics. It states that when the price of a good rises, the amount demanded ______________, and when the price of a good falls, the amount demanded _____________.
A)
rises, rises
B)
falls, falls
C)
rises, falls
D)
falls, rises
Measures that assure equal opportunities for women in employment are called
A)
work place quotas.
B)
affirmative action.
In the business cycle model, a recession is MOST LIKELY
A)
a turnaround point where the real GDP stops going up.
B)
a turnaround point where the real GDP stops going down.
C)
a period during which the real GDP increases for two quarters in a row.
D)
a period during which the real GDP decreases for two quarters in a row.
Aiden is considering types of insurance to cover his newly-purchased home near a river. Aiden should MOST LIKELY research
A)
if his health insurance includes injuries due to construction.
B)
if his life insurance premiums will decrease due to owning a home.
C)
if his property insurance policy will include flood damage benefits
Land, labor, capital, and entrepreneurs are the
A)
basis of employment.
B)
results of production.
C)
factors of productio
ll of the following would cause a shift to the left of the demand curve EXCEPT for
A)
an increase in taxes.
B)
reduction in exports.
C)
increased money supply.
Which organization was created to make trade between its members easier?
A)
European Union
Which statement BEST summarizes the information presented in this map?
A)
Many nations refuse to trade with the United States.
B)
The value of US exports exceeds the value of imports.
C)
The U.S. has free trade agreements with many foreign nations.
iscal policy is BEST described as
A)
B)
C)
D)
In a market economy, a high price will usually cause
A)
producers to offer less and consumers to buy less.
B)
producers to offer less and consumers to buy more.
C)
When a person agrees to a regular, fixed payment of wages over a period of time, he/she agrees to earn a
A)
wage.
B)
salary.
mposing some sort of cost on trade that raises the price of the traded products is MOST LIKELY an example of
A)
a trade barrier.
B)
a trade surplus.
C)
a trade deficit.

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1)

they are mainly voluntary charges

they are sources of state revenue

they are examples of graduated taxes

they are responsible for equal amounts of revenue

In a market economy, a high price is a signal for A)

producers to supply less and consumers to buy less.

producers to supply less and consumers to buy more.

producers to supply more and consumers to buy less.

producers to supply more and consumers to buy more.

Macroeconomic Concepts (SSEMA1) Economic Activi

(SSEMA2) Federal Reserve (SSEMA3) Fiscal Policy

Fundamental Economic Concepts (SSEF4) Economic Systems

Standards affect over 80 percent of global commodity trade.

the APR after the introductory period expires

Productivity may BEST be defined as

the quantity of production

the amount of revenue earned

the ratio of inputs to outputs

more oversight from the executive branch.

more oversight from the legislative branch.

significant control by the Treasury Department.

relative independence of the Federal Reserve System

a person buying a lottery ticket

no nation can be economically self-sufficient.

resources are evenly distributed around the world.

nations use their absolute advantage in production to monopolize international markets.

Why are regressive taxes considered heaviest on low income taxpayers?

Low income people should not have to pay taxes.

These facts provide evidence that Canada has a

the North Atlantic Treaty Organization.

the North American Free Trade Agreement.

the financial obligation to repay the loan. 6) What is an example of credit?

A person withdraws money from a bank account using an ATM card.

A person borrows money from a finance company to buy a car.

the exchange rate.

the discount rate.

Fundamental Economic Concepts (SSEF4) Economic Systems

a decrease in the demand for that product.

a shift in the production possibilities frontier.

an increase in the quantity demanded of that product.

an increase in the quantity supplied of that product.

Microeconomic Concepts (SSEMI2) Law Of Demand (SSEMI3) Economic Behavior

the willingness of producers to supply a product.

the willingness to consumers to purchase a product.

Microeconomic Concepts (SSEMI2) Law Of Demand (SSEMI3) Economic Behavior

priority" in the industry. Deregulation is an important aspect of a market economy. 14)

ticket prices determined by market forces.

greater competition within the airline industry.

a decreased average level of safety for passengers.

the creation of more and smaller airports in the U.S.

Businesses buy goods and services from individuals.

Businesses purchase productive resources in product markets.

Microeconomic Concepts (SSEMI1) Flow Of Goods

ability to sell stock

ability to raise capital

establishment of price ceilings

limited liability of stockholders

Personal Finance Economics (SSEPF5) Risk-management

Market economies discourage free enterprise.

In a market economy, the government sets prices.

Command economies tend to have a higher per capita GDP.

In a command economy, individuals have less economic freedom.